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Mat creadit entitlement accounting

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This query is : Resolved

Rohan Sharma (Querist)

14 June 2012 XYZ CO had paid MAT in the previous year.. the company forget to record the mat credit entiltlement in the previous year.

The MAT Laibility arrise in the previous say 1 lacs out of whih company paid as advance tax 0.5 lacs and balance 0.5 lacs by way of self assessment tax

In the previous the company tax liablity as per Income tax law is zero

So my question can company record the MAT CREDIT entitlement in the current year of Rs 1 lacs by passing of Journal entries

MAT credit A/c Dr 1.00 lacs
TO Advance Tax 0.5lacs
To Self Ass.Tax 0.5lacs

is the above entries passesed is correct or there are any other way to record???
pl reply....

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)

14 June 2012 MAT credit entitlement can be taken in a subsequent year wherein the eligibility of receovery is established.

Entry for receording MAT credit entitlement is as follows:

MAT credit Entitlement (Asset) Dr. 1 lac
To MAT Credit (Tax expense in P&L)Cr. 1 Lac

It will redcue the effective tax rate of that particular year.

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