CS Executive · Tax Laws and Practice · Classification and Tax Incidence on Companies
Under section 206 of the Income-tax Act, 2025 (as amended by the Finance Act, 2026, effective from tax year 2026-27), what is the rate of minimum alternate tax on book profit for a domestic company that is not an IFSC unit?
The MAT rate for an ordinary company is 14% of book profit under section 206 of the Income-tax Act, 2025, after the Finance Act, 2026 substituted it for 15%. IFSC units earning solely in convertible foreign exchange pay 9%, and 18.5% applies to non-company alternate minimum tax.
- A14%Correct
- B15%
- C18.5%
- D9%
Explanation
Section 206(1)(b)(ii) now prescribes 14% on book profit for any company other than an IFSC unit earning solely in convertible foreign exchange; that unit pays 9%. The earlier 15% rate was substituted with effect from 1 April 2026. The 18.5% rate is the alternate minimum tax for non-corporate persons, not companies.
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