Mat on Long Term Capital Gain in Companies A/cs

[Guest]

Dear Sir,

In FY 2011-12 the companies Profit & Loss accounts Books Profit shows the Rs. 22,25,475/-as on 31st March-2012.
Profit & Loss accounts includes the Long Term Capital Gain on Share for RS.14,35,345/- & Dividend Rs.34710/-.

While preparing computation of income of the company the  normal Tax Due is Rs.2,65,241/- and the MAT due is RS.4,24,064/-. Long Term Capital Gain for  Rs.14,35,345/- & Dividend Rs.34,710/- is exempt U.S. 10(38).  

MAT due is correct or not. What can i do. What is the actual accounts treatment

Kindly give the suggestion as earliest.

Thanks & Regards


(N. Kadam)

[CAGOPALJI AGRAWAL]

The basic rate of income tax is 30%. Surcharge is applicable if income exceeds 1 crore @5%. EC+SHEC extra. Please check the calculation for normal tax.

Dividend is covered u/s 10(34) if declared u/s 115O. Hence would be deducted while calculating book profit u/s 115JB hence it would be 2225475-34710. MAT would be 18.54% only.

AI Summary

Minimum Alternate Tax applicability: dividend exempt under section 10(34)/115O reduces book profit, affecting MAT computation. The advisory notes that dividend income covered by the dividend exemption and declared under the dividend distribution regime should be deducted while computing book profit for MAT purposes, and that long term capital gain exempt under the capital gains exemption is treated as exempt for book profit computation; the responder also advises verifying the normal tax calculation and notes surcharge and cesses may affect tax, and specifies the MAT rate used in the calculation.