Mat credit

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.

thnks dear....

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

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.

...thnku vry mch.....

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?

@ 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.

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