Tax experts and industry analysts are increasingly calling for the phased withdrawal of Minimum Alternate Tax (MAT) provisions, arguing that its continued relevance has diminished in the evolving corporate tax landscape of India. With the introduction of lower corporate tax rates and the optional new tax regime under Section 115BAA and 115BAB, which exclude MAT applicability, the justification for MAT as a safeguard against zero-tax companies is being questioned. Experts assert that the original purpose of MAT—to ensure a minimum tax contribution from profitable entities claiming numerous exemptions—is now largely redundant due to the elimination of several tax holidays and deductions.

The presence of MAT in parallel with the new tax regime creates a dual-framework complexity that undermines the objectives of simplification and transparency in tax compliance. Companies that choose to remain under the old regime continue to face MAT liabilities, while those under the new regime forego valuable MAT credits, leading to an uneven playing field. This fragmented system not only complicates financial planning but also results in stranded tax assets and increased compliance burdens. Experts argue that a phased removal of MAT, with a clearly defined roadmap, would support a smoother transition toward a uniform and modern corporate tax structure.

Phasing out MAT is also seen as a necessary step to enhance India’s competitiveness in attracting foreign investment, particularly at a time when global firms are evaluating alternative manufacturing and service hubs. Several countries have already moved away from similar minimum tax frameworks, focusing instead on streamlined regimes and digital taxation models. Experts recommend that India take cues from global best practices, rationalize its tax framework, and reallocate administrative resources currently spent on MAT-related litigation and compliance toward more strategic areas of tax governance and economic growth.