Minimum Alternative Tax (MAT) is a fixed percentage of profits that companies must pay under the Income Tax Act, regardless of whether they have paid tax under the normal provisions. It was introduced to prevent companies from avoiding tax by taking advantage of various exemptions and deductions. MAT is calculated under Section 115JB of the Income Tax Act and is applicable to all companies, including foreign companies. Companies must pay the higher of tax calculated under normal provisions or under the MAT provisions, with a tax rate of 15% of book profits plus 4% education cess and applicable surcharge (if any) since FY 2019-20. MAT was 18.5% prior to AY 2020-21.