deffred tax liablity

hi, myself ayush agrawal i just want to know that what is the effect of mat entitlement i.e journal entry

Replies (3)

Hi Ayush,

MAT credit is available if u have paid tax as per MAT provisions.. As per guidence note on accounting of MAT credit, MAT credit is to be recognized in the books by passing following entry:

MAT Credit Entitlement A/c                Dr.

         To Profit & Loss A/c

MAT Entitlement A/c is to be shown in balancesheet under current assets. When in the coming 7 years tax is paid as per normal provisions, then MAT credit will be available and in that year this account will be credited.

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

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

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