Section 206 - Special provision for minimum alternate tax and alternate minimum tax
MAT/AMT is a parallel tax base. The review must reconcile financial statements, statutory additions/reductions, Ind AS transition items, special-rate income and available credit.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 206 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier tax years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
MAT/AMT is a parallel tax base. The review must reconcile financial statements, statutory additions/reductions, Ind AS transition items, special-rate income and available credit.
Who should use this section
Finance and tax teams evaluating special provision for minimum alternate tax and alternate minimum tax, especially where an option, special rate, denied deduction, loss pool, book-profit adjustment or transition credit can change the effective tax burden under section 206.
How section 206 works in practice
Section 206 sits in Chapter 13 (Determination of Tax in Special Cases) and should be read as a connected rule rather than an isolated label. The practical question is whether the facts actually satisfy the trigger for “Special provision for minimum alternate tax and alternate minimum tax”. A section 206 review should start with the taxpayer classification and the election/default rule, then rebuild taxable income before applying the headline rate. For section 206, separate ordinary income from special-rate income, identify deductions or losses that the regime blocks, and quantify transition balances before comparing alternatives. For special provision for minimum alternate tax and alternate minimum tax, the rate is the last step rather than the first. The operating controls are: Reconcile audited P&L to book-profit adjustments; Obtain Form 66 or Form 67 by the applicable date; Maintain year-wise MAT/AMT credit and expiry register. A reviewer should record why reconcile audited P&L to book-profit adjustments., because that conclusion drives the downstream computation, reporting or procedural consequence.
Old-law bridge
sections 115JB, 115JAA, 115JC and 115JD
The old-law bridge is a research aid, not an automatic precedent transfer. Match the old provision, the current section, saved proceedings and effective dates before importing an older interpretation.
Finance Act 2026 / current-law note
Finance Act, 2026 recasts MAT for the 2025 Act: MAT in the old regime is a final tax at 14%; domestic-company set-off of brought-forward MAT credit is tied to the concessional regimes and capped at 25% of tax liability, while foreign-company set-off follows the statutory difference test. The amendment also widens the specified non-resident presumptive-business exclusion.
Professional alert
Reconcile audited P&L to book-profit adjustments. Obtain Form 66 or Form 67 by the applicable date. Maintain year-wise MAT/AMT credit and expiry register.
Connected Income-tax Rules, 2026 and Forms
Worked application
A company has low regular taxable income but substantial book profit. Compute tax under normal provisions and section 206, apply the higher liability, and separately track eligible credit.
Evidence / compliance checklist
- Reconcile audited P&L to book-profit adjustments.
- Obtain Form 66 or Form 67 by the applicable date.
- Maintain year-wise MAT/AMT credit and expiry register.
- Maintain the section 206 option/default evidence and due-date proof.
- Archive the computation bridge from ordinary provisions to section 206 tax.
- Tie every denied deduction, loss or credit to the relevant current-law clause.
Common mistake
Treating section 206 as a headline-rate shortcut. Special provision for minimum alternate tax and alternate minimum tax must be applied only after testing eligibility, the option mechanics, blocked deductions/losses, special-rate income and any Finance Act 2026 transition rule.
Recommended approach
For section 206, create a one-page legal-to-evidence matrix. For section 206, put the current statutory condition in the first column, the transaction or procedural fact in the second, the supporting document in the third, and the tax/procedural consequence in the fourth. The first checkpoint should be: Reconcile audited P&L to book-profit adjustments. This section 206 matrix makes reviewable differences visible before a return, opinion, notice response or litigation position is finalised.
Thresholds, rates, periods and timing checkpoints
- 14% MAT rate under Finance Act 2026 old-regime framework
- 25% cap on specified domestic-company MAT-credit set-off
- 15-year remaining carry period for qualifying legacy MAT credit
Related provisions and interaction map
Section 206 should be cross-checked with surcharge, cess, rebate, special-rate income, loss carry-forward, return-option and transition provisions. Optional regimes also require a permanent record of deductions, depreciation and credit balances surrendered or preserved on entry.
Direct navigation / cross-checks: section 205, section 200, section 207
Selected judicial bridge
- Malayala Manorama Co. Ltd. v. Commissioner of Income Tax, Trivandrum (Supreme Court of India, 10 April 2008): Old-law MAT/book-profit authority discussing the limits of recomputing certified company accounts and examining Apollo Tyres. Transfer only after matching section 206 and Finance Act 2026 adjustments. Official court source.
Judicial transfer is never automatic: compare the 1961 Act wording and issue with the current 2025 Act text before relying on the authority.
Validated statutory core - official current source controlled
Text-status note: This page presents a validated operative statutory core rather than pretending a summary is verbatim law. Use the linked official consolidated Act before quoting sub-section language in a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Finance Act 2026 amendment materials: Official Notes on Clauses
Forms guidance: Official FAQs / Guidance Notes on Income-tax Rules, 2026 forms
Quoting note: The official consolidated Act controls verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 decision automatically decide section 206?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which source should be quoted in advice or litigation?
Quote the official consolidated statute for the relevant tax year. Where this page presents a validated statutory core rather than complete verbatim text, use the official Act for sub-section wording.
What should be checked immediately before acting?
Re-check the current statutory text, the section-specific Rule/Form mapping and any notification or court order relevant to the exact facts. Section 206 should not be applied from a historic section number or a generic tax summary alone.