The introduction of the new tax regime under Section 115BAA and related provisions has not fully resolved the complexities surrounding Minimum Alternate Tax (MAT), particularly for companies transitioning from the older framework. Although the new regime offers a concessional corporate tax rate and excludes MAT applicability for those opting in, many companies are still grappling with legacy MAT credits accumulated under the previous system. These credits, while technically valid for a 15-year carry-forward, face limitations in utilization since entities under the new regime are no longer liable to pay MAT, rendering their previously accrued credits unusable.

This disconnect has raised significant concerns among tax professionals and corporate taxpayers who argue that the transitional impact was not adequately addressed in policy design. Companies that shifted to the new regime with an expectation of simplified compliance now find themselves unable to claim the financial benefits of MAT credits recognized in their earlier financial statements. The inability to offset MAT credit against any future tax liability effectively results in a loss of previously paid taxes, which affects financial reporting and raises questions about equitable treatment across tax structures.

Despite repeated representations by industry bodies, the government has yet to issue a definitive resolution on how to treat unused MAT credits for companies opting into the new tax regime. Proposals such as allowing MAT credit refunds, enabling a one-time adjustment, or offering limited transition relief have been suggested but remain unimplemented. This policy gap continues to create uncertainty for companies considering a switch to the new regime, as they weigh lower tax rates against the forfeiture of past credits, thereby undermining one of the key objectives of tax reform—predictability and fairness in taxation.