MAt credit

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Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2010 what is MAt creadit, please some one state it in simple language, if possible please cite the Example

Aditya Maheshwari

Aditya Maheshwari (Expert)
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11 August 2010 MAT credit can be taken in a year in which tax payable on book profit u/s 115JB is more than tax on income as per normal provisions of the act.

For Eg:
Year 1

Tax on income as per normal provisions - 100

Tax on book profit as per 115JB - 150

Here though tax payable in this year will be Rs. 150 but u can take credit of MAT of Rs. 50 (150 - 100) to be adjusted in future years.

Year 2

Tax on income as per normal provisions - 75

Tax on book profit as per 115JB - 50

Here in this year there is a reverse case where tax on book profit is lower than income tax on income and hence MAT credit can be utilised in this year but not of Rs. 50 but of Rs. 25 (75 - 50) only. Balance MAT credit of Rs. 25 (50 - 25) to be carried forward.

Year 3

Tax on income as per normal provisions - 175

Tax on book profit as per 115JB - 125

Here in this year there is a reverse case where tax on book profit is lower than income tax on income and hence MAT credit can be utilised in this year but not of Rs. 50 but of Rs. 25 (50 - 25) only as balance in MAT credit is Rs. 25 only.