Understanding Other Comprehensive Income (OCI) Other Comprehensive Income includes income and expenses not routed through the Profit and Loss Account. OCI items are recorded directly in the equity section of the financial statements. Common OCI items include...
General Principle of MAT Credit Ownership MAT credit under Section 115JAA is allowed to the company that originally paid MAT. It is treated as a tax credit asset specific to the legal identity of that company. MAT credit cannot be freely transferred between entities....
Understanding MAT Credit and Refund Claims MAT credit arises when the MAT paid exceeds the normal income tax payable. It is not refunded directly but carried forward to offset future tax liabilities. Refunds are processed only if there is excess tax paid other than...
Purpose of Disclosure in MAT Computation MAT computation notes explain how book profit is adjusted for tax purposes. They provide transparency in the reconciliation between accounting profit and MAT profit. These notes are essential for tax audit, statutory audit, and...
Understanding Company Conversion Company conversion refers to a change in the legal structure of the entity. Common conversions include private limited to public limited, company to LLP, or amalgamation. Such conversions may be tax-neutral if conditions under the...
Nature of Inter-Company Transactions Inter-company transactions refer to dealings between companies under common control or ownership. These include sales, purchases, loans, services, royalty, or management fees. Such transactions must be recorded at arm’s length in...
Nature of Research and Development Expenses Research and development (R&D) expenses refer to costs incurred in innovation, design, and product development. They may include salaries, materials, technical consultancy, and trial costs. These expenses are recorded in...
Understanding Double Taxation under MAT Double taxation occurs when the same income is taxed more than once. MAT is levied when a company pays less tax under normal provisions but shows book profit. It does not tax the same income twice in the same year under two...
Binding Nature of Book Profit Courts have consistently held that book profit under MAT must be based on audited financial statements. Tax authorities cannot alter book profits unless there is a fraud or misrepresentation. Financial statements approved under company...
Nature of Equity Valuation Changes Changes in equity valuation arise from fair value adjustments in investments held in shares. These adjustments may be due to market fluctuations, revaluation, or impairment. Under Ind AS, such changes are often recorded through Other...