If one company has only long term capital gain in shares as a total income which is exempt from tax under income tax act then MAT will be applicable or not?
10 Replies
Divya K S
(CA)
(289 Points)
Replied 14 June 2011
Yes. For income tax purpose, LTCG will be exempt. But, profits include LTCG for 115JB profits. Hence MAT will be payable on the book profits.
CA MAYANK WADHERA
(CA CS CMA(I))
(789 Points)
Replied 14 June 2011
rightly said by divya because income exempt u/s 10(38) under income tax act is also considered as income u/s 115JB for computing MAT
CA Suraj Prasad Shaw
(Chartered Accountant)
(504 Points)
Replied 14 June 2011
Dear Divya,
For the purpose of calculating book profit LTCG will be excluded and any expenditure related to such income will be added back.
MAT is applicable to all companies. If tax calculated as per MAT is higher than Normal provision then MAT is applicable.
In the case of Pratik since there is no other income, MAT is lower than normal provision of tax calculation then MAT will be not applicable.
Somshekar (Rankholder)
(-)
(158 Points)
Replied 14 June 2011
Under section 115JB(2), one of the item to be reduced is as under
the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, if any such amount is credited to the profit and loss account.
LTCG u/s 10(38) should not be reduced from book profit. in other words dont make any adjustment to book profits
CA Suraj Prasad Shaw
(Chartered Accountant)
(504 Points)
Replied 15 June 2011
Agree with CA Somshekar....
LTCG u/s 10(38) should not be reduced from book profit. Thanks for correction.
varun rawlani
(CA)
(31 Points)
Replied 15 June 2011
yes Agree with CA Somshekar.
for- jigar : MAT mean minimum alternate tax that the companies have to pay in case when their profit as per income tax Act is less than book profit
CA MAYANK WADHERA
(CA CS CMA(I))
(789 Points)
Replied 15 June 2011
dear jigar,
if income tax payable by a co. is less than 18% of book profits
then 18% of book profit is payable along with applicable cess and surcharge ( known as MAT)
now if in future i.e upto 10 years from the year in which MAT is payable the income tax payable is more than 18% of book profits then the MAT credit is taken against such tax payable
CA MAYANK WADHERA
(CA CS CMA(I))
(789 Points)
Replied 15 June 2011
dear varun ,
MAT is payable even if there is loss as per income tax act
CA MAYANK WADHERA
(CA CS CMA(I))
(789 Points)
Replied 15 June 2011
dear varun ,
MAT is payable even if there is loss as per income tax act
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