Minimum Alternate Tax (MAT) Amendments in Union Budget 2026 – A Critical Analysis
06 Feb 2026
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Background of MAT Provisions Minimum Alternate Tax (MAT)[1] has worked as a minimum tax protection in India’s corporate tax system. It ensured that companies with substantial book profits pay a minimum level of tax, even if their taxable income under normal provisions is reduced due to deductions, exemptions, or incentives.
Under the existing framework:
- MAT is levied at 15% of book profits (excluding units in IFSC).
- MAT applies primarily to companies opting for the old tax regime.
- Where MAT exceeds tax computed under normal provisions, MAT becomes payable.
- The excess MAT paid over normal tax is allowed as MAT credit, which can be carried forward for 15 years and set off in years where normal tax exceeds MAT. So MAT was mainly a cash-flow issue, not a real cost.
