UPSC Prelims Practice Questions — EXEMPTION FROM MINIMUM ALTERNATE TAX (MAT) TO ALL NON-RESIDENTS WHO PAY TAX ON PRESUMPTIVE BASIS

Q1. Minimum Alternate Tax (MAT) payable by companies on their book profit is governed by which provision of the Income-tax Act, 1961?

  • A. Section 115JB
  • B. Section 115JC
  • C. Section 115BAA
  • D. Section 115BAB

Q2. Under Section 115JB, the Minimum Alternate Tax on a company is computed as which single rate applied to its book profit (before surcharge and cess)?

  • A. 15 per cent
  • B. 18.5 per cent
  • C. 22 per cent
  • D. 10 per cent

Q3. With reference to the presumptive-taxation sections applicable to non-residents, consider the following statements: 1. Section 44B deems 7.5% of the specified amounts as the profits of a non-resident engaged in the business of operation of ships. 2. Section 44BB applies to a non-resident engaged in the business of operation of aircraft. 3. Section 44BBB applies to a foreign company engaged in civil construction in certain turnkey power projects. Which of the statements given above is/are correct?

  1. Section 44B deems 7.5% of the specified amounts as the profits of a non-resident engaged in the business of operation of ships.
  2. Section 44BB applies to a non-resident engaged in the business of operation of aircraft.
  3. Section 44BBB applies to a foreign company engaged in civil construction in certain turnkey power projects.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. The presumptive taxation of a non-resident engaged in the business of operation of aircraft is governed by which section of the Income-tax Act, 1961?

  • A. Section 44BBA
  • B. Section 44BB
  • C. Section 44BBB
  • D. Section 44B

Q5. The provision exempting a foreign company from MAT where its total income comprises solely of profits taxable under Sections 44B, 44BB, 44BBA or 44BBB (Explanation 4A to Section 115JB) was introduced by which enactment?

  • A. Finance Act, 2018
  • B. Finance Act, 2016
  • C. Finance Act, 2015
  • D. Finance Act, 2020

Q6. The levy, collection and administration of MAT and of the presumptive-tax provisions applicable to foreign companies fall exclusively within the remit of which authority?

  • A. Central Board of Direct Taxes
  • B. Central Board of Indirect Taxes and Customs
  • C. Financial Intelligence Unit–India
  • D. Directorate of Enforcement

Q7. With reference to the direct-tax proposals for non-residents in the Union Budget 2026-27, consider the following: 1. Exemption from MAT to all non-residents who pay tax on a presumptive basis. 2. A five-year income-tax exemption for a non-resident supplying capital goods, equipment or tooling to a toll manufacturer in a bonded zone. 3. Exemption of the global (non-India sourced) income of a non-resident expert for a stay of five years under notified schemes. 4. A tax holiday till 2047 for foreign companies operating airlines under Section 44BBA. Which of the above is/are NOT correctly stated?

  1. Exemption from MAT to all non-residents who pay tax on a presumptive basis.
  2. A five-year income-tax exemption for a non-resident supplying capital goods, equipment or tooling to a toll manufacturer in a bonded zone.
  3. Exemption of the global (non-India sourced) income of a non-resident expert for a stay of five years under notified schemes.
  4. A tax holiday till 2047 for foreign companies operating airlines under Section 44BBA.
  • A. 1 and 2
  • B. 2 and 3
  • C. 3 and 4
  • D. 4 only

Q8. The Union Budget 2026-27 MAT proposal is notable because it extends the exemption from Minimum Alternate Tax to which category of non-residents?

  • A. All non-residents taxed on a presumptive basis
  • B. Only foreign companies taxed under Sections 44B, 44BB, 44BBA and 44BBB
  • C. Only non-residents resident in DTAA countries without a permanent establishment
  • D. Only non-resident foreign cloud-service providers using Indian data centres

Q9. With reference to the data-centre and cloud-services incentives announced in the Union Budget 2026-27, consider the following: 1. Foreign cloud-service companies using Indian data centres are granted a tax holiday till 2047. 2. The safe harbour fixes the foreign company's book profit at 15% for the purpose of levying MAT. 3. Services to Indian customers must be provided through an Indian reseller entity. 4. A safe harbour of 15% on cost is available where the Indian data-centre provider is a related entity of the foreign cloud company. Which of the above is/are NOT correctly stated?

  1. Foreign cloud-service companies using Indian data centres are granted a tax holiday till 2047.
  2. The safe harbour fixes the foreign company's book profit at 15% for the purpose of levying MAT.
  3. Services to Indian customers must be provided through an Indian reseller entity.
  4. A safe harbour of 15% on cost is available where the Indian data-centre provider is a related entity of the foreign cloud company.
  • A. 1 only
  • B. 2 only
  • C. 2 and 4
  • D. 1 and 3

Q10. The direct-tax incentives for foreign cloud-service providers using Indian data centres, announced in the Union Budget 2026-27, will be administered by which body under the Ministry of Finance?

  • A. Central Board of Direct Taxes, Department of Revenue
  • B. Ministry of Electronics and Information Technology
  • C. Central Board of Indirect Taxes and Customs
  • D. Department for Promotion of Industry and Internal Trade

Q11. The Central Board of Direct Taxes (CBDT) is a statutory body constituted under which enactment?

  • A. Central Board of Revenue Act, 1963
  • B. Income-tax Act, 1961
  • C. Central Board of Revenue Act, 1924
  • D. Finance Act, 1963

Q12. With reference to the distinction between Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT), consider the following: 1. MAT under Section 115JB applies to companies. 2. AMT under Section 115JC applies to persons other than companies. 3. MAT is levied on the adjusted total income of the company. 4. AMT is levied at 18.5% of the adjusted total income of a non-corporate assessee. Which of the above is/are NOT correctly stated?

  1. MAT under Section 115JB applies to companies.
  2. AMT under Section 115JC applies to persons other than companies.
  3. MAT is levied on the adjusted total income of the company.
  4. AMT is levied at 18.5% of the adjusted total income of a non-corporate assessee.
  • A. 1 and 2
  • B. 3 only
  • C. 3 and 4
  • D. 2 and 3