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Mat provisioning

Tax queries 468 views 1 replies

vicky

Article

73 Points Joined September 2012

Profit of a Private Limited Company as per IT Provisions is 25760 on which total tax liability is Rs. 7960 whereas the Book profit of the company before taking into consideration TAX Provisions is Rs. 112159. Now, I am confused as to how much provisioning is to be done against Current Tax as the amount of MAT is varying with the amount of provision. Please help

For Computation of Book Profit, wether Provision for Current Tax is to be added back or can we say that MAT is to be calculated on Profit before tax as per Books of Accounts.

Replies (1)

Arvind Sharma

ACA

1432 Points Joined May 2009

First of all, for computing MAT liability, Book Profit means, Profit after tax, and then addition of tax provision/paid to be made, (ultimate result, profit before tax), but this addition also includs int on tds.

Now, in you case, profit before tax will be Book Profit (as you provided nothing much info), so MAT will be Rs. 21372, and so MAT will apply and you have to made provision atleast Rs. 21372.