Quick Summary
The Income-tax Act, 2025 has retained the framework of Minimum Alternate Tax (MAT) for companies and Alternate Minimum Tax (AMT) for non-corporate taxpayers, while introducing important changes in the treatment of tax credits. The provisions are contained in Section 206 of the Income-tax Act, 2025. MAT is designed to ensure that companies with substantial book profits do not end up paying little or no tax because of deductions, exemptions and other tax concessions. What is MAT under the Inco
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FAQ :
MAT is a tax applicable to companies where the tax payable under normal provisions is less than 14% of their book profit, plus applicable surcharge and cess. The company pays the higher of the two calculated amounts.
AMT applies to non-corporate taxpayers, such as individuals and HUFs, when their adjusted total income exceeds Rs. 20 lakh. The standard AMT rate is 18.5% of adjusted total income, plus surcharge and cess.
Yes, a significant change is that no new MAT credit will accrue under the Income-tax Act, 2025, even if MAT exceeds the normal tax payable. However, MAT credit accumulated under the previous Act can still be carried forward and used.
No, if a company converts into an LLP, the MAT credit of the company cannot be carried forward by the LLP, as LLPs are not covered by MAT provisions, and the credit lapses upon conversion.
Companies subject to Section 206 must obtain a report from a chartered accountant in Form No. 66 certifying book profit computation. For non-corporate taxpayers subject to AMT, a chartered accountant's report in Form No. 67 is required.
Certain taxpayers are outside the MAT framework, including specified domestic companies opting for alternative tax regimes and certain foreign companies under specific conditions. For AMT, certain taxpayers opting for concessional tax regimes and specified funds are also exempt.
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