The proposed changes to the Minimum Alternate Tax (MAT) regime, announced in the Union Budget for FY27, will significantly impact companies in capital-intensive sectors such as infrastructure, Special Economic Zone (SEZ) units and tax-holiday startups, analysts said. Electronics manufacturing units, power and renewables and automobile firms will also require to modify their tax planning.

The government proposed a major overhaul of MAT to simplify the corporate tax structure and encourage companies to shift to the concessional 22% corporate tax regime.

The key changes include reducing the MAT rate from 15% to 14% on book profits, treating MAT as a final tax under the old regime with no new credit accumulation from April 1, 2026, and restricting set-off of existing MAT credits (accumulated up to March 31, 2026) to 25% of tax liability per year only for companies transitioning to the new regime.