Budget 2026 proposes Major Corporate Tax Changes: Govt. to Revamp MAT Framework [Read Finance Bill 2026]

The Union Budget for the financial year 2026-27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on Sunday, February 1, 2026. Significantly, the budget has brought forth numerous corporate tax reforms - with the revamp to the Minimum Alternate Tax (MAT) framework taking center stage.

Minimum Alternate Tax applies to companies that report substantial book profits but pay little or no income tax due to exemptions, deductions or incentives available under the Income Tax Act. Over time however, the MAT regime has been a source of disputes, primarily due to complex adjustments to book profits, interpretational issues and its coexistence among other concessional corporate tax mechanisms.

Key Direction of the MAT Revamp

Essentially, the 2026 Budget signals an intent to rationalise and streamline the MAT framework as part of its broader corporate tax simplification agenda.

Companies taxed under special concessional provisions are intended to remain outside the MAT net, reinforcing the government’s long-term objective of moving towards a single, simplified corporate tax track.

Consequently, the revamp of the MAT framework is in consonance with the government’s intention to reduce disputes and litigation.

What the Budget Does Not Change

The Budget 2026 does not propose:

Any increase in MAT rates

An expansion of MAT to new categories of companies

A reintroduction of MAT for companies already excluded under concessional regimes

The focus remains firmly on simplification and rationalisation, rather than on raising additional revenue through MAT.

The government’s approach in Budget 2026 reflected a continued shift towards a trust-based corporate tax regime which is positioned to enhance ease of doing business and long-term investment.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates