What is minimum alternate tax?
In one sentence
A floor tax for companies: if tax on total income is below a percentage of book profit, the company pays that percentage instead.
An everyday analogy
Like a minimum charge at a restaurant: you pay at least that amount.
How it flows
A real example
An IFSC unit earning solely in convertible foreign exchange pays MAT at 9% of book profit if its regular tax is lower.
Why it matters
A 100% deduction alone does not make a company’s tax nil.
How it differs
Alternate minimum tax is the similar floor for persons other than companies, such as LLPs.
What the law says
Section 206(1)(b)
(b) For the purposes of clause (a), the expressions “minimum alternate tax” means the amount of tax computed on the book profit— (i) in case of a company being a unit located in an International Financial Services Centre and deriving its income solely in convertible foreign exchange, at the rate of 9%; (ii) in case of any other company, at a rate of [14%].
Income-tax Act, 2025 as amended by the Finance Act, 2026 · text as notified, amendment footnote numbers omitted · checked 24 October 2026 · Official text
Show answer
No: section 206(1)(q)(ii) excludes it.
Related pages
Meet the expert
CS Prashant Kumar
Company Secretary & Compliance Officer
Global Horizons Capital Advisors (IFSC) Private Limited — an IFSCA-licensed investment banker
Published in The Chartered Accountant (Jun 2025, Jan 2025, Mar 2024) and Chartered Secretary (Aug 2023)
Prashant Kumar is a seasoned Company Secretary and corporate governance strategist with more than 13 years of experience advising large corporates, promoter-led groups and global businesses on compliance, regulatory risk and board governance. In GIFT IFSC, the IFSCA regime is his day job rather than a research topic.