Alternate Minimum Tax (AMT) on all Persons other than Companies [Sections 115JC to 115JF]

Alternate Minimum Tax (AMT) means the amount of tax computed on adjusted total income, — (1)   in case of an assessee being a unit referred to in section 115JC (4), at a rate of 9%; (2)   in any other case, at a rate of 18.5%. [Section 115JF(b)]

Where the regular income-tax payable for a previous year by a person (other than a company) is less than the alternate minimum lax payable for such previous year, the Adjusted Total Income shall be deemed to be the total income of such person and he shall be liable to pay income-tax on such total income at the rate of 18.5%. [Section 115JC (1)]

However, in case of a unit located in an International Financial Service Center and which derives the income solely in convertible foreign exchange, the alternate minimum tax under section 115JC shall be charged @ 9% instead of 18.5% [Section 115JC (4)]

Report from an Accountant [Section 115JC (3)]:

Every person to whom this section applies shall obtain a report, before the specified date referred to in section 44AB, in such form as may be prescribed, from an accountant referred to in the Explanation below section 288(2), certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provisions of this Chapter and furnish such report by that date.

Note.—The specified date shall be the date one month prior to the due date for furnishing the return of income under section 139(1).

To whom AMT shall be applicable [Section 115JEE (1)]

The provisions of AMT shall apply to a person who has claimed any deduction under:

(a)        Sections 80-IA to 80RRB other than section 80P; or

(b)        Section 10AA.

A person other than a company, who has not claimed any deduction under sections 80-IA to 80RRB and section 10AA shall not be covered under Alternate Minimum Tax [AMT].

To whom AMT shall Not be applicable [Section 115JEE(2)]

The provisions of AMT under Chapter XII-BA shall not apply to—

(a)        an individual or

(b)        a Hindu undivided family or

(c)        an association of persons or a body of individuals (whether incorporated or not) or

(d)        an artificial juridical person referred to in section 2(31)(vii),

if the adjusted total income of such person does not exceed Rs.20,00,000.

Tax credit for AMT:

Section 115JD provides the credit for tax (tax credit) paid by a person on account of AMT under Chapter XII-BA shall be allowed to the extent of the excess of the AMT paid over the regular income-tax. This tax credit shall be allowed to be carried forward up to the tenth assessment year immediately succeeding the assessment year for which such credit becomes allowable. It shall be allowed to be set off for an assessment year in which the regular income-tax exceeds the AMT to the extent of the excess of the regular income-tax over the AMT.

No interest shall be payable on tax credit allowed under section 115JD.

With a view to enable an assessee who has paid alternate minimum tax in any earlier previous year to claim credit of the same, in any subsequent year, the Act has inserted section 115JEE(3) so as to provide that the credit for tax paid under section 115JC shall be allowed in accordance with the provisions of section 115JD, notwithstanding the conditions mentioned in section 115JEE(1) or (2).

Levy of Alternate Minimum Tax (AMT)-

Alternate minimum tax which shall be determined as follows –

Step 1 –

Find out the regular income-tax liability of the non-corporate assessee ignoring the provisions of  sections 115JC to 115JF.

Step 2 –

Find out adjusted total income of the non-corporate assessee. Adjusted total income is net income or  total income of the non-corporate assessee as increased by –

1. amount claimed as deduction by the non-corporate assessee under sections 80H to 80RRB (except section 80P);
2. amount claimed as deduction by the non-corporate assessee under section 10AA; and
3. deduction claimed, if any, under section 35AD (as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 as if no deduction under section 35AD was allowed in respect  of the assets on which the deduction under that section is claimed).

If the assessee is an individual, HUF, AOP, BOI or an artificial juridical person and the adjusted total income is  Rs. 20 lakh (or less), then the provisions of alternate minimum tax are not applicable.

Step 3 –

Find out 18.5% [+ SC + HEC] of “Adjusted Total Income” computed under Step 2.

Step 4 –

If amount computed under Step 1 is equal to or more than amount determined under Step 3, then the  provisions of alternate minimum tax are not applicable. If, however, amount computed under Step 3 is more than  the regular tax liability determined under Step 1, then –

1. adjusted total income determined under Step 2 shall be deemed as total income of the non-corporate assessee for such previous year; and
2. 18.5% [+ SC + HEC] of adjusted total income shall be deemed as tax liability of the non-corporate assessee for such previous year.

Step 5 –

The excess of the amount computed under Step 3 over the amount computed under Step 1 shall be  available as credit† for alternate minimum tax. It can be carried forward and can be set off against regular tax  liability of the non-corporate assessee of the next year or subsequent year [but not beyond 10th assessment year  (up to the assessment year 2017-18) and not beyond 15th assessment year (from the assessment year 2018-19)].No  interest is payable on such credit. Tax credit shall be allowed to be set off for an assessment year in which the  regular income-tax exceeds the alternate minimum tax to the extent of the excess of the regular income-tax over  the alternate minimum tax.

 Step 6 –

If provisions of alternate minimum tax are applicable, the assessee will have to obtain a report in Form  No. 29C from a chartered accountant.