Where the regular income-tax payable for a previous year by a person (other than a company) is less than the alternate minimum tax 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)]
- “Adjusted total income” shall be the total income before giving effect to provisions of sections 115JC to 115JF as increased by the deductions claimed under sections 80-IA to 80RRB other than section 80P included in Chapter VI-A and deduction claimed under section 10AA [Section 115JC(2)].
- “Alternate minimum tax:” shall be the amount of tax computed on adjusted total income at a rate of 18.5%; [Section 115JF(b)]
- “Regular income-tax” shall be the income-tax payable for a previous year by a person other than a company on his total income in accordance with the provisions of the Act other than the provisions of Chapter XII-BA (i.e. sections 115JC to 115JF). [Section 115JF(d)]
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:
- under sections 80-IA to 80RRB other than section 80P; or
- 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].
2. To whom AMT shall not be applicable [Section 115JEE(2)]
The provisions of AMT under Chapter XII-BA shall not apply to—
- an individual or
- a Hindu undivided family or
- an association of persons or a body of individuals (whether incorporated or not) or
- 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.
3. Levy Of Alternate Minimum Tax (AMT) –
A Limited Liability Partnership or any other Non-Corporate Assessee is subject to Alternate Minimum Tax (AMT) 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—
- amount claimed as deduction by the non-corporate assessee under sections 80H to 80RRB, (not being section 80P);
- amount claimed as deduction by the non-corporate assessee under section 10AA; and
- (from the assessment year 2015-16) 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 + (EC + SHEC) or HEC] of “adjusted total income” computed under Step 2. The effective rate (as percentage of adjusted total income) for the assessment years 2018-19 and 2019-20 is as follows –
|If Assessee is Firm / Co-Operative Society||If assessee is any Individual / HUF / AOP / BOI / Artifitial Juridical Person|
|If Adjusted Total Income is Rs. 50 Lakh or Less||19.24%||19.24%|
|If Adjusted Total Income is Rs. 50 Lakh but not more than Rs. 1 Crore||19.24%||21.164%|
|If Adjusted Total Income is more than Rs. 1 Crore||21.5488%||22.126%|
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 will not be applicable. If, however, amount computed under Step 3 is more than the regular tax liability determined under Step 1, then—
- adjusted total income determined under Step 2 will be deemed as total income of the non-corporate assessee for such previous year; and
- 18.5% [+ SC + (EC + SHEC) or HEC] of adjusted total income will 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 will 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.