MAT Credit Calculator

Minimum Alternate Tax (MAT) under Section 115JB ensures that a company with book profits but low or zero taxable income (due to deductions, exemptions, or incentives) still pays a minimum tax to the government. MAT is 15% of the company's book profit, and the company pays the higher of MAT or its normal tax liability.

MAT is designed to prevent zero-tax companies. Even if your taxable income is nil after deductions under Section 80-IAC or other provisions, you may still need to pay MAT if 15% of your book profit exceeds your normal tax.

If you pay MAT because it exceeds your normal tax, the excess amount becomes MAT credit. This credit is carried forward and can be set off against future tax years when your normal tax exceeds MAT — effectively, you get the credit back in a later year.

Credit amount

MAT paid minus normal tax liability for that year. Only the excess over normal tax qualifies as credit.

Carry-forward period

MAT credit can be carried forward for up to 15 assessment years from the year in which it arose.

Set-off rules

MAT credit can be set off in a year where normal tax exceeds MAT — but only to the extent of the difference. You cannot set off more than the excess of normal tax over MAT in any given year.

Credit expiry

Unused MAT credit expires after 15 years. Plan your tax position to utilise credit before it lapses.

Section 115JB(6) provides a MAT holiday for eligible startups: MAT does not apply for the first 5 years from incorporation. To qualify:

• The company must be a DPIIT-recognised startup.
• Incorporated on or after 1 April 2016.
• The holiday applies to the first 5 consecutive years from the year of incorporation.
• You must not opt for Section 115BAA (the 22% new regime) — companies under 115BAA are exempt from MAT anyway.

If you're within the first 5 years, you pay only your normal tax — no MAT. But no MAT credit is generated during the holiday period. Once the holiday ends, MAT applies normally if 15% of book profit exceeds your tax liability.

MAT = 15% × Book profit (adjusted per Section 115JB)

Tax payable = max(MAT, Normal tax liability)

MAT credit = Tax payable − Normal tax (credit carry-forward up to 15 years)