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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Return of Companies

Under section 206 of the Income-tax Act, 2025 (as amended by the Finance Act, 2026, applicable from June 2027 session), a domestic company that is not an IFSC unit has tax payable on its normal total income lower than the minimum alternate tax. What is the MAT rate on book profit?

The MAT rate for an ordinary company is 14% of book profit under section 206 of the Income-tax Act, 2025 as amended by the Finance Act, 2026. The earlier 15% was substituted, 18.5% is the alternate minimum tax for non-corporate persons, and 9% is for IFSC units.

  1. A14%Correct
  2. B15%
  3. C18.5%
  4. D9%

Explanation

Section 206(1)(b)(ii) now prescribes 14% for companies other than IFSC units deriving income solely in convertible foreign exchange. 15% was the earlier rate, substituted w.e.f. 1-4-2026. 18.5% is the AMT rate for non-company persons under sub-section (2), and 9% applies to IFSC units.

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