Could any one
let me know about the MAT calculation i.e, which section deals with it & method of computaion? THANK YOU.!!
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Mat calculation
Replies (4)
dear sir, pleas provided mat and cs related other
shahsunny92 @ gmail.com
09427452708
Basic objective behind introduction of MAT provisions was to levy tax on zero tax companies.
Zero tax companies are companies showing profits in books and also paying out dividends, however, not paying tax/marginal tax on account of various incentives( for example: incentives under chapter VIA- C – in relation to certain incomes, etc). Therefore, Government wanted to get some tax from these companies also.
Section 115JB was introduced by Finance Act, – Provides for levy of tax on book profits at 18.5%
MAT is payable only if tax as per normal provisions of the Act is less than 18.5% of “book profits
P&L account/statement is to be prepared in accordance with Schedule III of Companies Act, 2013(earlier Schedule VI of the companies Act, 1956); exception for banking, insurance, power generation companies, etc. -
Computation of Book Profit
The following amount(s) need to be deducted or added to profit/loss as shown in profit & loss statement/account while computing book profit (Provided they have been already been credited to debited to the P&L statement/account respectively so as to nullify there effect)
| Reductions | Additions |
| Amount withdrawn from any reserve or provision | Amount carried to any reserves by whatever name called (other than reserves relating to shipping business created under Section 33AC) |
| Amount of income covered by section 10 [except section 10(38)], section 11 or section 12 | Amount of expenditure in relation to incomes covered by section 10 [except section 10(38)]; |
| The amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account.
Note: Loss and unabsorbed depreciation to be considered in the books as at the commencement of the year |
Amounts of dividends paid or proposed to be paid; |
|
|
| Amount of deferred tax, if any |
However, Income tax penalty or its interest . Tax including Wealth tax penalty or its interest. Penalties under other laws Need not be added back
However, provisions made on scientific basis are not to added back for Example: Provision for encashment of leave (SC Judgment: BHARAT EARTH MOVERS) |
| Profits of a sick industrial company subject to certain conditions | Provisions for loss of subsidiaries |
Should Other Incomes showing in P/L needs to be less while calculation Book Profit,
Also payment to PM relife fund needs to be add back ,
Kindly revert
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