I have a query on MAT (Minimum Alternate Tax) Section 115JB on the The Income Tax Act, 1961.
We all know the provision of Section 115JB.
My query is: 1. Is the provision for MAT calculated as per Section 115JB also required to be made in the balance sheet for the relevant year or it is sufficient to keep IT records separately & have the MAT provision there only???????
2. MAT credit is carried forward & benefit of the same is claimed in the future years by setting off tax liability under normal provisions of the IT Act, 1961. How to present the same in the balance sheet & books of account?????
3. If the MAT Provision is to be made in the balance sheet for the relevant year, how to make the provision in books of account & entries to be passed???
07 September 2010
1. yes, as per the companies act and other relevant provisions it is mendatory to made provision for MAT..you can also show the mat tax credit available in the balance sheet
2. furthere at the time of setting off mat with income tax, you have to show the balance figure of mat tax credit available..
entry which is to be passed at the time of making the proviosn will be.
07 September 2010
Dear Mr. Nishchint Kumar thanx for your reply but my query is still unresolved.
The entry which you have suggested above does not create any asset in the balance sheet under the head current assets. I have read somewhere that the credit of tax paid under MAT is shown under the heads current years & in later year same is adjusted against normal tax liability.
The entry above is simple tax provision which all of us know.
08 September 2010
Incidentally , I came across such a situation , where our company was under MAT for 2008-09. Make a Current Year Tax provision with the Full amt. as per the normal provisions of the Income Tax Act and show the MAT credit Entitlment to the extent of the diff between the Tax liability as per the normal provisions and Tax liability as per MAT.
CAclubindia
