Corporate Tax
MAT book-profit working: depreciation reconciliation
A disciplined reconciliation between the financial statements and the statutory MAT computation.
Use the adopted financial statements as the starting point
A MAT working should begin with the profit disclosed in the statement of profit and loss prepared under the applicable corporate-law framework. It should not begin with taxable income or the normal depreciation schedule.
Reconciliation file
- Audited or final financial statements
- Companies Act depreciation schedule
- Income-tax depreciation schedule
- Deferred-tax and provision ledgers
- Prior-year MAT credit records
- Clause-by-clause addition and deduction working
Keep the two depreciation systems separate
Tax depreciation is relevant to normal taxable income, while the MAT computation begins with book profit and permits only the statutory adjustments. A bridge showing both computations prevents accidental substitution of one depreciation figure for the other.