MAT - Minimum Alternate Tax

Minimum Alternate Tax (MAT) is a levy under Section 115JB of the Income-tax Act that stops profitable companies from escaping tax entirely by using exemptions, deductions and accelerated depreciation to bring their taxable income down to nil or near-nil. When the normal income-tax payable by a company works out to less than 14% of its book profit, the company must instead pay MAT at 14% of that book profit, plus the applicable surcharge and health and education cess. The Finance Act, 2026 cut the rate from 15% to 14% and made MAT a final tax in the old regime from FY 2026-27.

How book profit is computed

MAT is charged on "book profit", not on income computed under the normal provisions. Book profit begins with the net profit in the profit and loss account prepared under the Companies Act, 2013, then adjusts for the additions and deductions specified in Explanation 1 to Section 115JB, for instance the income-tax provision and amounts carried to reserves are added back. Every company liable to MAT must obtain a report in Form 29B from a Chartered Accountant certifying the computation and file it with its return.

Rate and MAT credit

Situation	MAT rate
Companies (general)	14% of book profit
Unit in an IFSC earning solely in convertible foreign exchange	9% of book profit

From FY 2026-27, MAT is a final tax and no fresh MAT credit under Section 115JAA arises. Credit accumulated up to 31 March 2026 can be set off only after a company shifts to the concessional regime, capped at 25% of normal tax and carried forward for up to 15 assessment years.

Who it applies to

MAT applies to companies; the equivalent for non-corporate assessees is Alternate Minimum Tax under Section 115JC. Domestic companies that opt for the concessional regime under Section 115BAA or Section 115BAB fall outside MAT altogether.