Updated: September 28, 2026

Section 115JB of the Income-tax Act, 1961: Minimum Alternate Tax, Book Profit and the New Section 206

Section 115JB was the principal Minimum Alternate Tax provision for companies under the Income-tax Act, 1961. It required a company to compare tax under the normal provisions with tax calculated on its "book profit" and, where the statutory conditions were met, pay MAT on book profit.

What is Minimum Alternate Tax?

Minimum Alternate Tax, commonly called MAT, is a special tax mechanism for companies. Its purpose is to ensure that a company with substantial accounting profits does not pay little or no income-tax merely because its taxable income is reduced by deductions, exemptions or other adjustments available under the normal computation provisions.

The basic comparison is between the company's tax liability under the normal provisions and the MAT liability computed with reference to statutory book profit. Where MAT is higher and the provision applies, MAT becomes the tax payable.

Section 115JB: special provision for payment of tax by certain companies

Section 115JB of the Income-tax Act, 1961 contained a non-obstante rule. Broadly, where income-tax payable by a company on total income computed under the 1961 Act was less than the prescribed percentage of its book profit, the book profit was deemed to be its total income and tax was payable at the MAT rate.

For assessment year 2020-21 onward, the general rate under Section 115JB(1) was reduced from 18.5% to 15% of book profit, before applicable surcharge and health and education cess.

What did "book profit" mean under Section 115JB?

Under Explanation 1 to Section 115JB(2), "book profit" broadly meant the profit shown in the statement of profit and loss prepared in accordance with the applicable statutory accounting requirements, increased and reduced by the specific items prescribed in Section 115JB. It was therefore not simply the accounting profit shown in the financial statements.

For a company generally governed by the Companies Act, 2013, the statement of profit and loss was required to be prepared in accordance with Schedule III. Companies governed by the special accounting route referred to in Section 129 of the Companies Act, 2013 were required to follow the law governing that company, subject to Section 115JB.

Major adjustments in computing book profit under Section 115JB

The statutory computation contained detailed additions and reductions. Important examples are summarised below. The exact provision applicable to the relevant assessment year should always be checked because Section 115JB was amended repeatedly.

Common additions to net profit

• Income-tax paid or payable and provision for income-tax, where covered by the provision.
• Amounts carried to reserves, subject to the statutory wording.
• Provisions for liabilities other than ascertained liabilities.
• Provision for losses of subsidiary companies.
• Dividends paid or proposed where the statutory adjustment applied.
• Specified expenditure relatable to exempt or specially treated income.
• Depreciation, deferred tax and provision for deferred tax in the circumstances specified by the section.
• Provision for diminution in the value of an asset and other specifically listed adjustments.

Common reductions from net profit

• Eligible withdrawals from reserves or provisions, subject to the statutory conditions.
• Specified exempt income credited to the statement of profit and loss.
• Depreciation debited to the statement of profit and loss, excluding depreciation on account of revaluation, as prescribed.
• Eligible withdrawal from revaluation reserve.
• Brought-forward book loss or unabsorbed depreciation, whichever was less, subject to the conditions and special rules in the section.
• Deferred tax credited to the statement of profit and loss and other specifically permitted reductions.

Ind AS companies: Sections 115JB(2A), 115JB(2B) and 115JB(2C)

Section 115JB contained additional rules for companies whose financial statements were prepared in compliance with Indian Accounting Standards. These provisions dealt with specified items in other comprehensive income, certain demerger adjustments and transition amounts arising on convergence to Ind AS. Because these rules depend heavily on the nature of the accounting entry and the relevant year, the statutory text and applicable Form 29B should be checked for the particular case.

Important cases where Section 115JB did not apply

The 1961 Act contained several exclusions and special rules. Among the important provisions were the following:

• Section 115JB did not apply to income accruing or arising to a company from life insurance business referred to in Section 115B.
• Section 115JB did not apply to a person who had exercised the option under Section 115BAA or Section 115BAB.
• Specified foreign companies could fall outside Section 115JB where the conditions relating to treaty residence, permanent establishment or registration under company law were satisfied.
• A foreign company whose total income consisted solely of specified presumptive business income under Sections 44B, 44BB, 44BBA or 44BBB, offered to tax at the prescribed rates, was covered by the specific exclusion in the section.

Form 29B under Section 115JB

Section 115JB(4) required the prescribed accountant's report certifying that book profit had been computed in accordance with the section. The prescribed report was Form 29B. The Income Tax Department describes Form 29B as the report under Section 115JB for computing the book profits of a company.

For periods governed by the 1961 Act, taxpayers should use the applicable e-Filing instructions and form version for the relevant assessment year.

Official Income Tax Department: Form 29B

Current law from tax year 2026-27: Section 206 of the Income-tax Act, 2025

The Income-tax Act, 2025 applies from April 1, 2026. For tax year 2026-27 and subsequent tax years, the corporate MAT rules are contained in Section 206, titled "Special provision for minimum alternate tax and alternate minimum tax."

Under the current provision, if the income-tax payable by a company under the normal provisions is less than the minimum alternate tax payable for the tax year, book profit is deemed to be total income and the company is liable to pay MAT. Following the Finance Act, 2026, the general MAT rate is 14% of book profit, plus applicable surcharge and cess. A qualifying IFSC unit deriving income solely in convertible foreign exchange is subject to the special 9% rate.

Meaning of book profit under current Section 206

Section 206 continues the concept of statutory "book profit": profit shown in the statement of profit and loss is adjusted by additions and reductions specified in the section. The current provision also contains detailed rules for Ind AS companies and specified transactions.

MAT credit after April 1, 2026

A significant change under the Income-tax Act, 2025 as amended by the Finance Act, 2026 is that no new MAT credit accrues merely because MAT paid under the new Act exceeds tax under the normal provisions. Eligible MAT credit accumulated under Section 115JAA of the repealed Income-tax Act, 1961 may continue to be dealt with under the transitional rules in Section 206, subject to the conditions applicable to domestic and foreign companies.

Form 66 replaces Form 29B for the new Act

For the Income-tax Act, 2025 framework, the prescribed MAT reporting form is Form 66 under Rule 137 of the Income-tax Rules, 2026. It relates to computation of book profit and MAT under Section 206(1). Form 29B remains relevant to Section 115JB matters under the repealed 1961 Act.

Official Income Tax resources

• Income Tax Department: MAT and AMT under the Income-tax Act, 2025, as amended by the Finance Act, 2026
• Income Tax Department: Form 29B
• Income Tax Department: Income-tax forms and utilities
• Income Tax Department: Form 66 FAQs

Related provisions and pages

For connected company MAT provisions under the repealed Income-tax Act, 1961, see Section 115JAA: MAT credit, Section 115JA: deemed income relating to certain companies, and the Income Tax Act overview.

This article is a general legal and tax information resource. For a return, assessment, appeal or transaction, verify the provision applicable to the relevant assessment year or tax year and the latest official Act, Rules, forms, notifications and circulars.