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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, which statement about MAT credit for a domestic company that has NOT opted for the concessional regime is correct from tax year 2026-27 onwards?

No fresh MAT credit arises from 1 April 2026, because the credit clauses were omitted. The 25% set-off of brought forward credit under sub-section (3) applies only to domestic companies that opted for the concessional regime.

  1. ANo fresh MAT credit is allowed for MAT paid; the sub-section (3) set-off of old credit applies only to companies that opted for the concessional regimeCorrect
  2. BFresh MAT credit is carried forward for fifteen years and set off against any excess normal tax
  3. CMAT paid creates credit that can be set off up to 25% of normal tax
  4. DMAT credit lapses immediately on payment of MAT

Explanation

Clauses (m) to (p), which gave fresh credit, were omitted w.e.f. 1-4-2026. Sub-section (3) applies only to a domestic company exercising the option under section 200(5) or 201(2), allowing old credit set-off up to 25% of tax. So only the first option is accurate.

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