Alternative Corporate Tax
Minimum Alternate Tax (MAT) is a provision under the Indian Income Tax Act, 1961, which ensures that companies paying minimal or no regular corporate tax (due to exemptions and deductions) pay a minimum tax on their book profits. MAT is levied at 15% of book profit (as of FY 2025-26), as per Section 115JB of the Income Tax Act.
Features of Alternative Corporate Tax
- The following features highlight the Minimum Alternate Tax (MAT) as applicable to Indian companies (as of FY 2025-26):
- MAT is levied at 15% of a company's book profit, computed under Section 115JB of the Income Tax Act, 1961, plus applicable surcharge and cess.
- A company must pay whichever is higher of its normal corporate tax liability or its MAT liability on book profits.
- MAT credit, being the excess of MAT paid over the normal tax liability in a year, can be carried forward and set off against normal tax liability for up to 15 assessment years.
- Companies that opt for the concessional corporate tax regimes under Sections 115BAA and 115BAB are exempt from MAT.
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