An enterprise is liable for a higher income tax liability and MAT tax when MAT is greater than the company’s normal tax liability. This difference between MAT and the normal tax liability of a company is called ‘MAT credit’.  Here is an example Suppose the tax liability as per normal provisions is ₹10 lacs, while as per MAT provisions, it is ₹10.5 lacs. Therefore, the company is eligible for MAT credit as MAT is higher than normal tax liability.  The MAT credit in this case would be ₹10.5 lacs - ₹10 lacs = ₹50,000.