Mat Credit Entitlement For How Many Years

Such excess of tax credit is allowed to be carried forward and set off in the financial year in which the company is liable to pay tax under the general provisions of the income tax act.

Mat credit entitlement for how many years.

In a case where the total income of the company. Rs 14 43 000 rs 12 48 000 rs 1 95 000. Such tax credit shall be carried forward for 15 assessment years immediately succeeding the assessment year in which such credit has become allowable. Suggestion on clause 46 a of finance bill 2017 section 115jaa extension of period of carry forward of mat credit from 10 years to 15 years clarity regarding carry forward and set off of mat credit in cases where the ten year period has expired on or before ay 2016 17 but the fifteen year period has still not expired.

This mat credit can be carried forward and set off for 10 consecutive assessment years succeeding the year in which the tax credit first accrued. Due to increase in the number of zero tax paying companies mat was introduced by the finance act 1987 with effect from assessment year 1988 89. In case of conversion of the company into a limited. 4 relevant extract of the budget speech 1996 97.

Unabsorbed mat credit will be allowed to be accumulated subject to the 10 years carry forward limit. In the assessment year when regular tax becomes payable the difference between the regular tax and the tax computed under mat for that year will be set off against the mat credit available. The finance bill 2017 proposes to amend section 115jaa of the. The mat credit and carry forward provisions indicate that it was always the intention that mat should not be a final tax on a company.

This is with effect from ay 2018 19 prior to which mat could be carried forward only for a period of 10 ays. Currently tax credit can be carried forward up to the 10th. Year but by taking the advantage of various provisions of income tax law like exemptions deductions depreciation etc it may have reduced its tax liability or may not have paid any tax at all. I propose to introduce a minimum alternate tax mat on companies.

Tax experts welcomed the move to reduce the corporate tax reduction to 25 per cent for msmes with turnover up to rs 50 crore. The asset may be reflected as mat credit entitlement. In the year of set off of credit the amount of credit availed should be shown as deduction from the provision of taxation on the liabilities side of the balance sheet.