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MAt credit

CA Sandeep Thakur (Managment Trainee) (188 Points)

16 September 2009

Dear all

i have a problem regarding the mat credit availment and presentation in financial statement ..

Suppose this year comany is first time recognising the mat and the provision of current tax is made of MAT and in such a case the Diffeernce between the normal tax and mat is to be recognised in the current year or in the year which i mat credit is avalible for set offf ...

please help and qoute the relevent text ...

Regards

sandeep

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4 Replies

Naveen Chand Khulve (CA) (1521 Points)
Replied 16 September 2009

Originally posted by :Sandeep Thakur

Dear all

i have a problem regarding the mat credit availment and presentation in financial statement ..

Suppose this year comany is first time recognising the mat and the provision of current tax is made of MAT and in such a case the Diffeernce between the normal tax and mat is to be recognised in the current year or in the year which i mat credit is avalible for set offf ...

please help and qoute the relevent text ...

Regards

sandeep

Hi Sandeep

First of all you should reduce your noraml tax by the amount so the closing balance of Normal tax shows the same amount as in mat credit entitlement (through provision for tax).

Then you can pass entry of taking MAT Credit entitlement .

In profit & loss account shows the difference between Normal tax & MAT (which will be nil) and MAT amount will be reflect under loans & advances in Balance Sheet.