Tax liability

Calculation of net tax to be paid in project finance case

Calculation of corporate tax calculation (CTL)

Step 1. Calculate PBT (for income tax purpose) = PBT+ Book depreciation –Tax Depreciation

Step 2. CTL= if (mat year(80IA)=Y or PBT <0),0, PBT (for income tax purpose)*tax rate )  

Step 3. MAT liability= PBT (Book Dep)*MAT rate

Step 4. Tax liability without MAT credit=Max(MATL, CTL)

MAT Credit earned in this period= MAX(0, MATL-CTL)

Cumulative MAT Credit Available=

MAT Credit Utilized in this period=IF(CTL>MATL),(CTL-MATL),(0))

Step 5. Net tax paid= if (MATL>CTL, MATL, CTL-MAT Credit utilized in the period)