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CS Executive · Tax Laws and Practice · Classification and Tax Incidence on Companies

Which statement about the application of the minimum alternate tax provisions in section 206 of the Income-tax Act, 2025 is correct?

MAT does not apply to a company having income from life insurance business referred to in section 194(1). Section 206 also excludes persons who exercised the option under section 200(5) or 201(2), and certain foreign companies are outside it by clause (l).

  1. AThey do not apply to a company earning income from life insurance business referred to in section 194(1)Correct
  2. BThey apply to every foreign company irrespective of treaty residence and permanent establishment
  3. CThey apply only to listed companies
  4. DThey apply only where the company has no brought forward loss

Explanation

Section 206(1)(q) excludes a company having income from life insurance business referred to in section 194(1) (Sl. No. 6), and also persons who exercised the option under section 200(5) or 201(2). Foreign companies are exempt in the treaty cases of clause (l), so the second option is wrong. MAT is not restricted to listed companies.

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