Under section 206 of the Income-tax Act, 2025, the provisions for Minimum Alternate Tax (MAT) on book…

Under section 206(1) of the Income-tax Act, 2025 (formerly s.115JB of the Income-tax Act, 1961), where the income-tax payable by a company on its total income is less than the minimum alternate tax, its book profit is deemed to be its total income and it pays tax equal to the minimum alternate tax. MAT is not levied on all companies: section 206(1)(q) excludes a company having income from life insurance business and a person who has exercised the option under section 200(5) (concessional rate of 22% for domestic companies) or section 201(2) (new manufacturing domestic companies).

A domestic company taxed at the normal rates whose tax falls below MAT is exactly the case to which MAT applies, and a unit in an International Financial Services Centre deriving its income solely in convertible foreign exchange remains liable to MAT at the concessional rate of 9% under section 206(1)(b)(i). Since one of the options is correct, 'None of the given options is correct' is wrong. Persons other than companies (such as firms and LLPs) are covered instead by alternate minimum tax under section 206(2).