Minimum Alternate Tax (MAT) for companies

Companies whose tax computed under normal provisions is LESS than 15% of BOOK PROFIT pay MAT @ 15% (+ surcharge + cess) on book profit. MAT credit can be carried forward 15 years. §115BAA / §115BAB opt-out companies are EXEMPT from MAT.

Key points

• §115JB applies where the income tax payable on the TOTAL INCOME of a COMPANY, computed under the normal provisions of the Act, is LESS THAN 15% of its BOOK PROFIT.
• In that case, the tax payable is the higher of: (a) tax on total income under normal provisions;
• or (b) 15% of book profit (effective rate: 15% + 10% surcharge if applicable + 4% Health & Education Cess ≈ 17.16%).
• BOOK PROFIT = net profit per the P&L statement prepared per Schedule III, ADJUSTED for: (+) income tax, deferred tax, dividend distribution tax;
• provisions for unascertained liabilities;
• amounts withdrawn from reserves credited to P&L;
• depreciation including for revaluation;
• reverses extraordinary items going through OCI;
• LESS (-) withdrawals from revaluation reserve to the extent credited to P&L;
• deferred tax credit;
• carried-forward business loss OR unabsorbed depreciation, whichever is LOWER as per books;
• profits of sick-industrial-company period.
• MAT CREDIT u/s 115JAA: excess of MAT over normal tax can be carried forward FIFTEEN AYs and set off in any year where normal tax exceeds MAT.
• EXEMPT FROM MAT: (i) §115BAA / §115BAB concessional-regime companies (cannot reclaim accumulated MAT credit once opted in);
• (ii) Ind-AS first-time adopter year transition rules apply.
• Reported in Form 29B (CA-certified) filed with ITR-6.

Reference: §115JB read with §115JAA, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §206