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Mat credit

Rahul jain (LEARNING & TEACHING) (435 Points)

15 February 2014

dear frnds

for how many years MAT CREDIT can be carry forward?

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9 Replies

Arvind Sharma (ACA) (1432 Points)
Replied 15 February 2014

As per the provision of Sec 115JAA, MAT Credit can be carried forward upto 10 AY. e.g. If you has paid MAT for AY 13-14, the same can be carried forward and set-off against Normal Tax Liability upto AY 23-24.

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CA Siddhi (PRACTICE) (257 Points)
Replied 15 February 2014

MAT credit can be carried forward upto 10 years immediately succeeding the year in which credit falls due.

Rahul jain (LEARNING & TEACHING) (435 Points)
Replied 15 February 2014

thnks dear....

and can i setoff my MAT CREDIT with my business income.....?

Arvind Sharma (ACA) (1432 Points)
Replied 15 February 2014

No.

MAT Credit is adjustable against Tax Liability under normal provision and not against Income. It is NOT a LOSS, but like TDS. Further, MAT can be adjust against normal tax to the exten liability under MAT provision.

e.g.

Op MAT Credit Rs. 10 lacs

Total Income is Rs. 20 lacs (assuming no adjustment)

Tax will be Rs. 6

Book Profit Rs. 20 lacs. (assuming no adjustment)

MAT Rs. 3.70

So, here, Op MAT can be set-off by Rs. 2.3 only, and balance Rs. 7.70 will be carried forward.

Tax under Normal Provision will be than Rs. 6 lacs - Rs. 2.30 lacs = Rs. 3.70. Cess will be added, Advance Tax TDS will be deducted and Interest u/s 234A/B/C will be added, if applied.

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Rahul jain (LEARNING & TEACHING) (435 Points)
Replied 15 February 2014

...thnku vry mch.....

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Rahul jain (LEARNING & TEACHING) (435 Points)
Replied 15 February 2014

dear ......

is there any differernce between mat credit u/s115jaa and mat credit u/s 115jd.

and once a comapny out of its loss making situation and earn profit is there still mat is payable or normal tax?

Arvind Sharma (ACA) (1432 Points)
Replied 15 February 2014

@ Rahul,

I wrongly mentioned Sec 115JD instead 115JAA. There is no difference between both except that Sec 115JAA is applicabe wrt Minimum Alternative Tax (MAT) levied on Companies while Sec 115JD is applicable wrt Alternative Minimum Tax (AMT) levied on other than Companies.

Both are regarding Credit of Tax paid u/s 115JB (MAT) or u/s 115JC (AMT) and carry forward & set-off provisions which are same.

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nikhil (ca) (221 Points)
Replied 14 April 2016

sir In the above case, I think Current tax should be adjusted to the extent of 3.7 lacs which is the amount of MAT Tax. So Tax payable by the entity must be 2.3L(6L-3.7L)+E.cess& HSEC. Please clarify is it correct.I am confusing. Thanks & regards Nikhil

Nitish Agrawal (CA) (810 Points)
Replied 30 September 2016

Hi Nikhil,

Your calculation is not correct, the solution provided above by Arvind ji is correct in itself as we can take adjustment of MAT credit of earlier years to the extent the current tax is exceeding the MAT tax in current year.

hope you are clear now about it