Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) 2026-27: Rates, Book Profit and Credit (Income Tax Act 2025)
Section 206 of the Income Tax Act 2025 sets a floor on tax. A company that would otherwise pay less than 14% of its book profit pays that 14% as Minimum Alternate Tax (MAT). A person other than a company that has claimed certain deductions and would otherwise pay less than 18.5% of its adjusted total income pays that amount as Alternate Minimum Tax (AMT). The MAT rate is 14% from 1 April 2026 (tax year 2026-27); it was 15% before the Finance Act, 2026 changed it.
Everything below comes from section 206 (as amended by the Finance Act, 2026) and rules 76, 118, 137 and 138. The tax-year examples all use 2026-27. For the old-law mapping, check the 1961 Act separately; this guide does not rely on it.
What is MAT and what is AMT under the Income Tax Act 2025?
Both are a minimum tax. Normal tax is worked out on total income after deductions. If that number falls below a second number computed on a wider base, the second number is what you pay. The two versions sit in different sub-sections.
| MAT: section 206(1) | AMT: section 206(2) | |
|---|---|---|
| Who | A company | A person other than a company |
| Base | Book profit (from the statement of profit and loss) | Adjusted total income (total income plus specified deductions) |
| Rate | 14% (9% for an IFSC unit earning solely in convertible foreign exchange) | 18.5% (15% for a co-operative society; 9% for an IFSC unit earning solely in convertible foreign exchange) |
| Trigger | Normal tax on total income is less than MAT | Regular income-tax is less than AMT |
| Accountant's report | Form No. 66 (rule 137) | Form No. 67 (rule 138) |
Does my company or business have to pay MAT or AMT? A quick decision path
The diagram is a simplification. Other exclusions exist, listed further down.
How is book profit computed for MAT?
"Book profit" means the profit shown in the statement of profit and loss for the tax year, prepared as required by section 206(1)(f), then adjusted by the items in section 206(1)(c) and (d). The statement is prepared under Schedule III to the Companies Act, 2013, except for insurance and banking companies, electricity companies and other classes that have their own prescribed format (section 206(1)(f)).
The accounting policies, standards and depreciation method must be the same as those used in the accounts laid before the company's annual general meeting (section 206(1)(g)).
| Add back, if debited to the statement of profit and loss | Reduce, if credited to the statement of profit and loss |
|---|---|
| Income-tax paid or payable and the provision for it, including interest under the Act, surcharge and cess (206(1)(c)(i)) | Amount withdrawn from a reserve or provision, where book profit was earlier increased by it (206(1)(c)(xi)) |
| Amounts carried to reserves (206(1)(c)(ii)) | Income to which section 11 applies, or regular income of a registered non-profit organisation under section 335 (206(1)(c)(xii)) |
| Provisions for liabilities other than ascertained liabilities (206(1)(c)(iii)) | Depreciation debited to the statement, excluding depreciation on revaluation of assets (206(1)(c)(xiii)) |
| Provision for losses of subsidiary companies (206(1)(c)(iv)) | Amount withdrawn from revaluation reserve and credited to the statement, up to the depreciation on revaluation (206(1)(c)(xiv)) |
| Dividends paid or proposed (206(1)(c)(v)) | Deferred tax credited to the statement (206(1)(c)(xv)) |
| Depreciation (206(1)(c)(vii)) | Brought-forward loss (excluding depreciation) or unabsorbed depreciation, whichever is less, as per books (206(1)(c)(xvi)) |
| Deferred tax and its provision (206(1)(c)(viii)) | |
| Provision for diminution in the value of any asset (206(1)(c)(ix)) |
This table is a summary of the main items. The full list, including expenditure relating to section 11 income, revaluation reserve on disposal, and the special adjustments in section 206(1)(d) for Ind AS companies, foreign companies, business trusts, companies under the Companies Act tribunal process and companies in insolvency resolution, should be read from the section itself. The loss-or-depreciation reduction in item (xvi) has a carve-out: where either amount is nil, the reduction does not apply to a company other than those in clause (d)(vi) and (vii).
What is the MAT rate for 2026-27?
14% of book profit for any company other than an IFSC unit; 9% for a company that is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange (section 206(1)(b)). The 14% replaces the 15% that the section carried before the Finance Act, 2026, with effect from 1 April 2026. Surcharge and cess are not worked into the examples here, since their rates are outside section 206.
Worked example 1: MAT for a domestic company (tax year 2026-27)
Assumptions: A domestic company, not an IFSC unit, has not opted under section 200(5) or 201(2). Its books show net profit of Rs 42,00,000 after charging a tax provision of Rs 18,00,000, a transfer to general reserve of Rs 4,00,000 and proposed dividend of Rs 6,00,000. It has a brought-forward book loss of Rs 14,00,000 and unabsorbed depreciation of Rs 10,00,000. Depreciation charged in books is added back under (c)(vii) and reduced under (c)(xiii), so it nets to nil here. Regular tax on total income, computed under the other provisions, is assumed to be Rs 5,50,000.
| Step | Item | Rs |
|---|---|---|
| 1 | Net profit per statement of profit and loss | 42,00,000 |
| 2 | Add: income-tax provision (206(1)(c)(i)) | 18,00,000 |
| 3 | Add: transfer to reserve (206(1)(c)(ii)) | 4,00,000 |
| 4 | Add: proposed dividend (206(1)(c)(v)) | 6,00,000 |
| 5 | Subtotal (42 + 18 + 4 + 6 lakh) | 70,00,000 |
| 6 | Less: lower of brought-forward loss (14,00,000) and unabsorbed depreciation (10,00,000) (206(1)(c)(xvi)) | 10,00,000 |
| 7 | Book profit (70 lakh less 10 lakh) | 60,00,000 |
| 8 | MAT at 14% (60,00,000 x 14 / 100) | 8,40,000 |
| 9 | Regular tax (assumed) | 5,50,000 |
| 10 | Tax payable: the higher of 8 and 9 | 8,40,000 |
Because regular tax is less than MAT, the book profit of Rs 60,00,000 is deemed to be the total income and the company pays tax equal to MAT (section 206(1)(a)). The company also needs the accountant's report in Form No. 66 (see below).
What is AMT and when does it apply to non-companies?
AMT applies to a person other than a company who has claimed any deduction under a section in Chapter VIII-C (other than section 149) or under section 46 (section 206(2)(c)). If you have claimed none of these, section 206(2) does not apply to you.
The "adjusted total income" is your total income, increased by the deductions claimed under those sections. For section 46, the add-back is the deduction reduced by the depreciation allowable under section 33, computed as if no deduction had been allowed on the assets (section 206(2)(b)(i)). The AMT is then 18.5% of adjusted total income, 15% for a co-operative society, and 9% for an eligible IFSC unit (section 206(2)(b)(ii)).
Who is outside MAT and AMT?
| Provision | Not covered |
|---|---|
| MAT, 206(1)(q) | A company with life insurance business income under section 194(1) (Table Sl. No. 6); a person who has exercised the option under section 200(5) or 201(2) |
| MAT, 206(1)(l) | A foreign company resident in a treaty country without a permanent establishment in India; a foreign company resident elsewhere that is not required to register under company law; a foreign company whose total income is solely business income under section 61(2), taxed at the rates in those sections |
| AMT, 206(2)(d)(i) | A person who has opted under section 203(5) or 204(2) (co-operative society options) |
| AMT, 206(2)(d)(ii) | A person whose tax is computed under section 202(1), the new tax regime for individuals, HUFs and others |
| AMT, 206(2)(d)(iii) | An individual, HUF, AOP, BOI or artificial juridical person (section 2(77)(g)) whose adjusted total income does not exceed Rs 20 lakh |
| AMT, 206(2)(d)(iv) | A specified fund referred to in Schedule VI (Note 1) |
The 202(1) exclusion matters for individuals. If you are taxed under the new regime slab table, AMT does not reach you. See our guide to the new tax regime slabs and rates.
Worked example 2: AMT and credit carry forward for a non-corporate taxpayer
Assumptions (tax year 2026-27 and a later year): A partnership firm, not an IFSC unit and not a co-operative society, has total income of Rs 25,00,000 after claiming a deduction of Rs 40,00,000 under a section in Chapter VIII-C (not section 149). Regular income-tax on the total income is assumed to be Rs 7,00,000. In a later year regular tax is assumed to be Rs 15,00,000 and AMT Rs 10,00,000.
| Step | Item | Rs |
|---|---|---|
| 1 | Total income | 25,00,000 |
| 2 | Add: Chapter VIII-C deduction claimed | 40,00,000 |
| 3 | Adjusted total income (25 lakh + 40 lakh) | 65,00,000 |
| 4 | AMT at 18.5% (65,00,000 x 18.5 / 100) | 12,02,500 |
| 5 | Regular income-tax (assumed) | 7,00,000 |
| 6 | Tax payable (AMT, as it is higher) | 12,02,500 |
| 7 | Tax credit under 206(2)(e): AMT less regular tax (12,02,500 less 7,00,000) | 5,02,500 |
| Later year | ||
| 8 | Regular tax less AMT (15,00,000 less 10,00,000) | 5,00,000 |
| 9 | Credit set off: limited to the excess in step 8 | 5,00,000 |
| 10 | Credit still to carry forward (5,02,500 less 5,00,000) | 2,500 |
Step 9 follows section 206(2)(g)(ii): set-off of brought-forward credit in a year is allowed only up to the excess of regular income-tax over AMT for that year.
Is there credit for MAT or AMT paid?
It depends on who paid and when.
- AMT (non-companies): the credit equals the excess of AMT over regular income-tax for that year (206(2)(e)). It carries no interest (206(2)(f)(i)), is set off in a year when regular tax exceeds AMT (206(2)(g)(i)), and cannot be carried forward beyond the fifteenth tax year after the year in which it becomes allowable (206(2)(g)).
- MAT (companies), from 1 April 2026: the clauses that gave a credit for MAT paid, 206(1)(m) to (p), were omitted by the Finance Act, 2026 with effect from 1 April 2026. Section 206(1) as it now stands has no provision creating new MAT credit.
- Older MAT credit already carried forward: where credit under section 115JAA of the 1961 Act was allowed to be carried forward as on 31 March 2026, sub-sections (3) and (4) govern it, depending on the type of company.
| Company | How brought-forward 115JAA credit is used (section 206(3), 206(4)) |
|---|---|
| Domestic company that opted under section 200(5) or 201(2) for a tax year beginning on or after 1 April 2026 | Set off in any tax year up to 25% of the tax payable on total income computed under the other provisions; the rest is carried forward; no carry forward or set-off beyond the fifteenth tax year after the year the credit first became allowable under 115JAA |
| Foreign company | Carried forward and set off in a year when tax on total income exceeds MAT under 206(1), limited to that difference; same fifteen-year cut-off |
For both, if a private or unlisted public company converts into an LLP, these credit rules do not apply to the successor LLP (206(3)(d), 206(4)(d)).
Worked example 3: using old MAT credit under section 206(3)
Assumptions (tax year 2026-27): A domestic company opts under section 200(5). Tax payable on total income under the other provisions is Rs 12,00,000. It has Rs 10,00,000 of credit under section 115JAA carried forward as on 31 March 2026, all within its fifteen-year window.
- Maximum set-off in the year: 25% of Rs 12,00,000 = Rs 3,00,000 (section 206(3)(b)(i)).
- Credit used: Rs 3,00,000 (lower than the Rs 10,00,000 available).
- Tax payable after set-off: Rs 12,00,000 less Rs 3,00,000 = Rs 9,00,000.
- Credit carried forward: Rs 10,00,000 less Rs 3,00,000 = Rs 7,00,000 (section 206(3)(b)(ii)).
Real-life scenarios
Ravi, an individual, claims a Chapter VIII-C deduction. His total income is Rs 12,00,000 and the deduction he claimed is Rs 6,00,000, so his adjusted total income is Rs 18,00,000. That does not exceed Rs 20 lakh, so section 206(2)(d)(iii) takes him out of AMT altogether. Had the adjusted figure been Rs 21,00,000, he would have had to compare regular tax with 18.5% of it, unless he was taxed under section 202(1), which also removes AMT.
Meena's co-operative society. The society claims a Chapter VIII-C deduction other than section 149, so section 206(2)(c) applies. The AMT rate is 15% of adjusted total income (206(2)(b)(ii)(II)), not 18.5%, because it is a co-operative society. Whether the Rs 20 lakh exemption helps depends on the entity type: that exemption names individuals, HUFs, AOPs, BOIs and artificial juridical persons, and does not name co-operative societies.
A private company that opted for the lower-rate regime. A domestic company exercised the option under section 200(5) and filed within the due date in section 263(1). Section 206(1)(q)(ii) says MAT does not apply to it, so the book profit exercise is not needed. It does, however, still need to follow section 206(3) for any old MAT credit.
What reports and forms are required?
- Company, MAT: a report from an accountant certifying that the book profit has been computed as per section 206, furnished before the "specified date" in section 63, or along with the return filed in response to a notice under section 268(1) (section 206(1)(s)). The form is Form No. 66 (rule 137).
- Non-company, AMT: a report from an accountant certifying the adjusted total income and AMT, furnished before the specified date in section 63 (section 206(2)(j)). The form is Form No. 67 (rule 138).
- APA or secondary adjustment relief: where book profit rises because past-year income is included through an advance pricing agreement (section 168) or a secondary adjustment (section 170), and the company has not utilised its section 115JAA credit (1961 Act) in any later tax year ending on or before 31 March 2026, the company can apply to the Assessing Officer to recompute past book profit under section 206(1)(i). The claim under rule 118(5) is made in Form No. 53, verified by the person authorised to verify the return under section 265. No interest is payable on a refund arising from this (section 206(1)(j)).
- Foreign tax credit: rule 76(8) lets foreign tax credit be allowed against tax payable under section 206 in the same manner as against normal tax.
Common mistakes
- Starting from total income instead of the profit in the statement of profit and loss when computing company book profit.
- Forgetting that a company on the section 200(5) or 201(2) option is outside MAT, or assuming a company outside those options can skip the MAT comparison.
- Treating AMT as a company-only tax. Section 206(2) covers any person other than a company who claims a Chapter VIII-C deduction (other than section 149) or a section 46 deduction.
- Ignoring the Rs 20 lakh adjusted total income test for individuals, HUFs, AOPs, BOIs and artificial juridical persons, and the exclusion for persons taxed under section 202(1).
- Assuming new MAT credit is still created for a company after 31 March 2026. The clauses that did this were omitted from 1 April 2026.
- Filing the return without the accountant's report in Form No. 66 or Form No. 67 before the specified date in section 63.
Quick reference
| Point | MAT | AMT |
|---|---|---|
| Section | 206(1) | 206(2) |
| Rate | 14%; 9% IFSC unit | 18.5%; 15% co-operative society; 9% IFSC unit |
| Base | Book profit | Adjusted total income |
| Threshold | None | Rs 20 lakh adjusted total income for individual, HUF, AOP, BOI, AJP |
| Report | Form No. 66 | Form No. 67 |
| Credit | New credit omitted from 1 April 2026; old credit under 206(3) and 206(4) | Excess of AMT over regular tax; 15 tax years; no interest |
Where this is in the Act
- Section 206(1): MAT, book profit, exclusions and report (Form No. 66, rule 137)
- Section 206(2): AMT, adjusted total income, credit and report (Form No. 67, rule 138)
- Section 206(3) and (4): brought-forward credit for domestic and foreign companies
- Rule 118: relief under section 206(1)(i); Form No. 53
- Rule 76(8) and (9): foreign tax credit against section 206 tax
- Sections 200, 201, 203, 204 and 202: options and regimes that take a person out of section 206
For a CA firm, the difficult part is tracking which clients are companies on the default regime, which have opted out, and which accountant's reports are due before the section 63 date. Finexo's practice management software keeps these deadlines against each client and reminds you before they pass. It does not compute MAT or AMT or file the forms for you.
This article is general information on the Income Tax Act 2025 and not tax advice. Confirm facts for your own case against the Act and the Rules.
Frequently Asked Questions
What is the MAT rate for tax year 2026-27?
14% of book profit for a company, and 9% for a company that is a unit in an International Financial Services Centre earning solely in convertible foreign exchange (section 206(1)(b)). The 14% replaced 15% with effect from 1 April 2026.
What is the AMT rate under the Income Tax Act 2025?
18.5% of adjusted total income in most cases, 15% for a co-operative society, and 9% for an eligible IFSC unit (section 206(2)(b)(ii)).
Who does AMT apply to?
A person other than a company who has claimed a deduction under a section in Chapter VIII-C (other than section 149) or under section 46 (section 206(2)(c)). It does not apply to persons taxed under section 202(1) or to individuals, HUFs, AOPs, BOIs and artificial juridical persons with adjusted total income up to Rs 20 lakh.
Does a company that opts for the section 200 rate pay MAT?
No. Section 206(1)(q)(ii) says MAT does not apply to a person who has exercised the option under section 200(5) or section 201(2). Section 206(3) governs any old credit it still carries forward.
Can a company still claim MAT credit?
The clauses of section 206(1) that allowed credit for MAT paid were omitted from 1 April 2026. Credit already allowed to be carried forward under section 115JAA of the 1961 Act as on 31 March 2026 is dealt with in section 206(3) and 206(4).
Which forms report book profit and adjusted total income?
Form No. 66 for the accountant's report on book profit under MAT (rule 137) and Form No. 67 for the report on adjusted total income under AMT (rule 138). Both are due before the specified date in section 63.