How To Compute Mat Tax

Rs 75 00 000 18 5 plus 4 rs 14 43 000.

How to compute mat tax.

Rs 14 43 000 rs 12 48 000 rs 1 95 000. The tax computed by applying 15 plus surcharge and cess as applicable on book profit is called mat. Tax liability as per mat provisions will be. How to compute advance tax step 1 estimate income of current financial year step 2 calculate tax on such income step 3 calculate surcharge education cess relief etc.

Friends most of us face the challenge of calculating tax as per income tax and as 22. As may be applicable step 4 calculate net tax payable step 5 deduct tds tcs mat credit step 6 calculate balance tax payable. Minimum alternate tax mat. Profit computed under the income tax is called regular profit and the tax under this method is called regular tax 3.

Tax computed as per the normal provisions of the income tax law i e by applying the relevant tax rate to the taxable income of the company. Tax computed 15 plus surcharge and cess as applicable on book profit manner of computation of book profit is discussed in later part. Calculation of book profits for the purpose of mat maximum alternate tax section 115jb step 1 find out net profit before other comprehensive income oci as per statement of profit and loss of the company. The amount of tax and surcharge cannot exceed the tax calculate under marginal relief tax on 1 crore 1 01 00 000 1 crore rs.

Tax computed at 15 previously 18 5 on book profit plus cess and surcharge. Since income exceeds 1 crore marginal relief is to be calculated i e. Presently mat is applicable to companies domestic and foreign but here only mat on company s u s 115jb is discussed. Here an effort is made to comprise all tax computation viz provision for tax mat deferred tax and allowance and disallowance of depreciation under companies act and income tax act in one single excel file.

Note if this balance tax payable is 10 000 or more then only advance tax payable. If the sum is debited to the profit and loss a c under the provisions of companies act it will not be added to compute book profit even if the same is disallowed under the income tax act. Such tax credit shall be carried forward for 15 assessment years immediately succeeding the assessment year in which such credit has become allowable. Profit computed under sec 115jb is called book profit and the tax computed is called mat.

Tax computed in above manner can be termed as normal tax liability. Hence tax payable by the company will be rs 14 43 000. Tax payable 18 5 surcharge 7 19 795 of 1 01 00 000 19 99 295. Step 2 adjustment to net profit to convert it into book profit which are given under explanation 1 to section 115jb 2.