VINEET KUMAR SHARMA

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VINEET KUMAR SHARMA

Minimum Alternative Tax (MAT)

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VINEET KUMAR SHARMA

Minimum Alternative Tax Requirement

Since, the companys Profit & Loss Account are prepared according to the provisions of Companies Act. However, they are liable to pay tax in accordance with Income Tax Act provisions. In many cases, companies are showing profit as per Companies Act, but not paying any tax due to loss or insufficient computed as per Income Tax. To bring such companies under dominance, the Government has introduced section 115JB.

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Minimum Alternative Tax Section 115JB

This is an extension of Section 115JA inserted during Finance Act, 2000 w.e.f. April 1st , 2001. Presently, the section provides that if tax payable on total income is less than 10% of book profit, then the company is liable to pay tax on 10% of book profit.

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Minimum Alternative Tax Section 115JB (Rate of Tax)

Particulars %age of Tax Till Assessment Year 2006-077.5% of Book Profit From Assessment Year 2007- 10% of Book Profit 08

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Minimum Alternative Tax Procedure of Computation

First of all, Compute the Total Income of the Company. Then, Compute tax payable thereon. Compute Book Profit in accordance with the provision of Section 115JB. Compute 10% of Book Profit. Check whether Tax to be paid > 10% of Book Profit. If yes, MAT is not applied, otherwise, the company is liable to pay 10% of Book Profit as Tax.

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Minimum Alternative Tax Computation of Book Profit

Particulars N e t Pro fit as pe r Pro fit & Lo ss A cco unt A d d : I n c o m e Ta x P a ya b l e A d d : A n y R es er ve m a d e (eg G en er a l R es er ve etc .) A d d : I n ter i m & P r o p o s ed D i vi d en d A m ount xx xx x xx x xx x xx

A d d : A n y P r o v i s i o n m a d e fo r Li a b i l i ti es o r Co n ti n gen t Li a b ixl xx i ty A d d : A m o u n t o f D ep r ec i a ti o n o n r eva l u a ti o n o f a n y A s s ets x xx xxx xx Les s : R es er ve o r P r o vi s i o n c r ed i ted i n P r o fi t & Lo s s A c c o u nxtxx Les s : A m o u n t o f Lo s s b r o u gh t fo r w a r d o r u n a b s o r b ed d ep r ec i a ti o n w h i c h ever i s l o w er x xx Boo k Profit as pe r Se ctio n 1 15 JB xxx

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Minimum Alternative Tax Procedure of Filing Return

The company has to take a duly signed report by Chartered Accountant under Form 29B . This report is attached with Companys Audit Report.

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P a r t ic u la r s Am ount N e t P r o fit a s p e r P r o fit & L o ss A c c o u n t x x x x A d d : In c o m e T a x P a y a b l e xxx A d d : A n y R e s e rv e m a d e ( e g G e n e ra l R e s e x x e e t c .) rv x A d d : In t e rim & P ro p o s e d D i v i d e n d xxx A d d : A n y P ro v i s i o n m a d e f o r L i a b il i t i e s o r xCxoxn t i n g e n t L i a b i li t y A d d : A m o u n t o f D e p re c ia t io n o n re v a l u a t i x x x o f a n y A s s e t s on xxxxx L e s s : R e s e rv e o r P ro v is i o n c re d i t e d in P ro fxi x x& L o s s A c c o u n t t L e s s : A m o u n t o f L o s s b ro u g h t f o rw a rd o r u n a b s o rb e d d e p re c i a ti o n w h ic h e ve r is lo w e r xxx B o o k P r o fit a s p e r S e c t ioxxx1 1 5 J B n
VINEET KUMAR SHARMA

V in e e t K u m ar Sh arm a