- Chapter XII-BA for levy of Alternative Minimum Tax on persons other than a company have been inserted by the Finance Act, 2011 w.e.f. Assessment Year 2012-13.
- Charge of Alternative Minimum Tax (Section 115JC(1))
Applicable To : a person other than a company
Condition : if Regular Income Tax < (is less than) Alternate Minimum Tax
Alternate Minimum Tax : @ 18.5% of Adjusted Total Income
- Computation of Adjusted Total Income (Section 115JC(2))
Total Income of the assesse
(after claiming all deductions under Chapter VI-A)
Add: Amount claimed as deductions under the Heading – C
Of Chapter VI-A, viz., 80IB, 80IC, 80ID, 80IE, etc
Add: Deduction claimed u/s 10AA
Adjusted Total Income
- If Adjusted Total Income is less than 20 lakhs, the provisions of this Chapter are not applicable. (Section 115JEE(2)).
- Audit report in Form 29C to be furnished by the assessee to whom Section 115JC applies. (Section 115JC(3))
- Adjustment of Tax Credit for Alternative Minimum Tax against Regular Income Tax (Section 115JD)
- Alternative Minimum Tax can be carried forward for 10 succeeding Assessment Years.
- the amount of Tax Credit that can be set off shall be the excess of “Regular Income Tax” less (-) “Alternate Minimum Tax” for that Assessment year.
Tax Planning :
Minimum Alternative Tax / AMT regime creates an opportunity to have an effective Income Tax Rate of 18.5%, without carry forward of Tax Credit in future, if both deductible and non-deductible incomes are taxed in the hands of the same assessee.
If we take into account the time value of money, this should afford better returns to investor, vis-à-vis separate entities.