in Direct Tax, Taxation |

Alternate Minimum Tax (AMT)

In simple terms, Alternate Minimum Tax (AMT) is a modified version of MAT for assessees other than Companies (to whom MAT Applies). This article deals with the provisions relating the Applicability of AMT provisions i.e. who is entitled,  what is the applicable rate of taxation under AMT Provisions, the definition of total income for AMT and provisions relating to allowance of Credit of AMT in future years.

The provisions relating to Alternate Minimum Tax (AMT) and provisions relating to credit of AMT has been discussed in the table given below: -

115JC

Special Provisions for Payment of tax by certain persons other than a company

(AMT meaning MAT for assessee other than Companies)

Where the regular tax payable by an assessee​​ other than company is less than Alternate Minimum Tax​​ (AMT)​​ then he shall be liable to pay income-tax @​​ 18.5%​​ on​​ Adjusted Total Income, which means Total income before giving effect to this chapter but increased by

  • Deductions claimed, if any, under chapter​​ VI-A (except section 80P)

  • Deductions claimed, if any, u/s 10AA

  • Deduction claimed u/s 35AD in excess of Depreciation allowable u/s 32

An assessee to whom this section applies shall obtain a report from an accountant defined u/s 288(2), certifying that the​​ adjusted total income and the AMT has been computed as per provisions of this chapter and the same has been furnished with return of income filed u/s 139(1).

This rate 18.5% will get substituted by 9% if the unit is located in International Financial Service Centre and deriving its total income in convertible foreign exchange.

115JD

Tax Credit for Alternate Minimum Tax

  • No interest is allowed on AMT Credit

  • AMT Credit allowed to be carried forward for 15 years.

  • Credit allowed in the year in which tax is​​ payable other than the provisions of section 115JA/115JB.

  • Maximum credit allowed in year will be the difference between tax actually payable minus tax that would have been payable under section 115JD i.e. AMT has to be paid every year.

  • If the amount of regular income-tax or the alternate minimum tax is reduced or increased as a result of any order passed under this Act, the amount of tax credit allowed under this section shall also be varied accordingly.

Published

Leave a Reply