MAT - Amount set aside to provision made for meeting liabili

[Ramesh Rangani]

Dear All,

Can you please give examples of following liabilities for MAT purpose:

Amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities.

Thanks and regards,
Ramesh

[Surender Gupta]

Any liability which are not ascertained and / or are of a contingent nature would fall within this category.

Sometimes, it happens that for unforeseen liability some provisions are made but the same are not finalized or ascertainiable.

As per Explanation 1, to section 115JB, such provisions are liable to be added to the book profits.

AI Summary

Add-back of provisions: unascertained or contingent liabilities must be added to book profits under MAT.
Provisions made for meeting liabilities that are not ascertained or are contingent, including unforeseen liabilities not finalized or ascertainable, must be added back to book profits for Minimum Alternate Tax purposes under the relevant explanatory provision, thereby increasing the book profit base for MAT computation.