mat credit entry
This query is : Resolved
11 October 2008
Sir i have a small doubt on the entry that has been posted!!!
Suppose, mat provision is 70000 and income tax provision 50000 ,mat entitlement to be carried forward would be 20000.
The year in which tax becomes payable as per mat ,shudn't the entry be
Income tax a/c dr 50000
mat entitlement dr 20000
To Income tax provision 70000
In next year subsequently the provision can be reversed too
Sir could u please clarify
Suppose, mat provision is 70000 and income tax provision 50000 ,mat entitlement to be carried forward would be 20000.
The year in which tax becomes payable as per mat ,shudn't the entry be
Income tax a/c dr 50000
mat entitlement dr 20000
To Income tax provision 70000
In next year subsequently the provision can be reversed too
Sir could u please clarify
S.Srinivasaraghavan
(Expert)
13 October 2008
We do not pass a carry forward entry for MAT in anticipation of a set off. It is as if :
Profit and loss a/c Dr
(entire MAT)
To provision for taxation
(entire MAT)
When there is profit sufficient enough to
absorb the MAT in subsequent years, then we pass entry for less taxation in that year(s)m concerned.
Profit and loss a/c Dr
(entire MAT)
To provision for taxation
(entire MAT)
When there is profit sufficient enough to
absorb the MAT in subsequent years, then we pass entry for less taxation in that year(s)m concerned.
CA Pawan Goswami
(Expert)
13 October 2008
In your question tax is payable as per MAT provisions.
You cannot take credit in the year in which MAT is payable. Credit can only be taken in the year in which tax as per normal provosions is payable to the extent of following:-
MAT Credit available - (TAx as per normal provisions - Tax as per MAT provisions)
You cannot take credit in the year in which MAT is payable. Credit can only be taken in the year in which tax as per normal provosions is payable to the extent of following:-
MAT Credit available - (TAx as per normal provisions - Tax as per MAT provisions)
13 October 2008
i kinda mistyped it in current yeat ,i also meant subsequent year .If in subsequent year ,if there are profits to cover the mat credit or absorb mat credit ,hw do u bring in mat credit to balance sheet???
in 1st year suppose
income tax provision -50000
tax payable as per mat -70000
so in subsequent year
u have i.t provision -80000
tax payable as per mat -40000
so now one can adjust the 20000 to income tax provision ... Then the entry would be
income tax paid 60000
mat entitlement 20000
to i.t provision 80000
does'nt the guidance note refer to mat credit being "Current Asset"?????
in 1st year suppose
income tax provision -50000
tax payable as per mat -70000
so in subsequent year
u have i.t provision -80000
tax payable as per mat -40000
so now one can adjust the 20000 to income tax provision ... Then the entry would be
income tax paid 60000
mat entitlement 20000
to i.t provision 80000
does'nt the guidance note refer to mat credit being "Current Asset"?????
S.Srinivasaraghavan
(Expert)
14 October 2008
First year
Profit and loss account Dr 70000
To provision for taxation 70000
(MAT)
Next year
Profit and loss account Dr 60000
To provision for taxation 60000
(Actual liability less
excess under MAT
Profit and loss account Dr 70000
To provision for taxation 70000
(MAT)
Next year
Profit and loss account Dr 60000
To provision for taxation 60000
(Actual liability less
excess under MAT
14 October 2008
They entry u posted is what i have already posted...Hey still where is mat entitlement in balance sheet????
Ravikumar.G
(Expert)
20 November 2008
get it from the following URL:
https://www.caclubindia.com/forum/messages/2007/8/2467_common_interview_questions_and_answers_tips.asp
https://www.caclubindia.com/forum/messages/2007/8/2467_common_interview_questions_and_answers_tips.asp
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