Alternate Minimum Tax (AMT) for Non – Corporate Assessee: An overview:

Loading

Alternate Minimum Tax (AMT) for Non – Corporate Assessee: An overview:

Without taxable income also, the tax liability could arise. This is possible in the case of Companies wherein Minimum Alternate Tax (MAT) is applicable. This is also possible in the case of other taxpayers where Alternate Minimum Tax (MAT) is applicable. The concept of AMT is there in section 115JC of Income Tax Act, 1961AMT was introduced so as to collect the tax from the Non Corporate Assessees who are having profit but are claiming certain profit linked deductions (like 80-IA, 80-IB, 10AA, etc) AMT is leviable when Tax as per normal provisions is less than Alternate Minimum Tax on Adjusted Total Income.

 

AMT I.e., Alternate Minimum Tax is required to be computed on the adjusted total income of a non-corporate assessee. 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 that person for such previous year and such assessee shall be liable to pay income-tax on such total income at the rate of 18.5%. However, the rate of AMT will be 9% if the person referred above is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange,.

The primary condition for applicability of AMT is that the assessee should be Non Corporate & Such assessee should have claimed deduction under chapter VI heading C (Deductions in respect of certain incomes except u/s 80P) or under section 10AA (Profit derived by SEZ Units) or Section 35AD (Deduction for expense on specified business). It may be noted that AMT is not applicable if: The Assessee is a corporate assessee as in such cases the provision of MAT is applicable u/s 115JB. Further, AMT is not applicable to other assessee if its Adjusted Total Income does not exceed Rs 20 Lakhs.

It is important to note that AMT is just like an advance tax in any year. If in any year AMT is payable then the difference between the Normal Tax Payable and AMT paid is allowed as AMT Credit and can be adjusted with normal tax liability in subsequent year in which the normal income tax payable exceeds the AMT calculation. Such AMT Credit can be carried forward up to 10 succeeding years.

section 115JC lays down that an assessee liable to AMT should obtain a report in a prescribed format from an Chartered Accountant, certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provisions of Chapter XIIBA and furnish the same on or before the due date of filing of the return u/s. 139(1).  Further, it may be noted that all other provisions relating to Advance tax, interest under sections 234A, 234B and 234C penalty, etc. shall apply to such non-corporate also. Importantly, other Deductions like u/s 80 C to 80GGC, 80 U and 80P are not to be added back in calculation of Adjusted Total Income. Even if in any subsequent year the chapter of 115JC is not applicable, the assessee can claim credit in such previous year.

For ease of reference, Section 115JBC is reproduced hereunder:

Special provisions for payment of tax by certain persons other than a company.

115JC. (1) Notwithstanding anything contained in this Act, 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 that person for such previous year and such assessee shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent.

(2) Adjusted total income referred to in sub-section (1) shall be the total income before giving effect to this Chapter as increased by—

 (i)  deductions claimed, if any, under any section (other than section 80P) included in Chapter VI-A under the heading “C.—Deductions in respect of certain incomes”;

(ii)  deduction claimed, if any, under section 10AA; and

(iii) 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.

(3) Every person to whom this section applies shall obtain a report, 89[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 sub-section (2) of section 288, 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.]

(4) Notwithstanding anything contained in sub-section (1), where the person referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the provisions of sub-section (1) shall have effect as if for the words “eighteen and one-half per cent”, the words “nine per cent” had been substituted.

Following sub-section (5) shall be inserted after sub-section (4) of section 115JC by the Finance Act, 2020, w.e.f. 1-4-2021 :

(5) The provisions of this section shall not apply to a person who has exercised the option referred to in section 115BAC or section 115BAD.

***********************************************

Income Tax Act on Your Mobile Now Android Application For Income Tax Act – 1961 with Cost Inflation Index and other tools on Mobile now at following link:

https://play.google.com/store/apps/details?id=com.thetaxtalk&hl

***********************************************

Whatsapp Group at

  1. https://chat.whatsapp.com/1FrbGXO1Mfk2sFTuAXF4lB
  1. https://chat.whatsapp.com/D84N1xhxhH5GXYvg3MICSG

***********************************************

Menu