Lakesh Kumar

Lakesh KumarAlternate Minimum Tax (AMT) For Other Than Corporate Assessee – Section 115JC  TO 115JF

Meaning– Alternate minimum tax means the amount of tax computed on the adjusted total income. AMT is a way collecting the minimum tax from the tax payers. Assessee shall be liable to pay tax on such income at a rate eighteen and one-half per cent (18.5%).It is not an additional tax levied on the taxpayer.

Before the Assessment year 2013-14, this Section 115JC was applicable only on Limited Liability Partnership. Now from the assessment year 2013-14 this section has been amended and covers all non corporate assessee (including Limited Liability Partnership).

Provision relating to such tax given in the Act as under:-

Acc.to Section 115JC (1). Notwithstanding anything contained in this Act, where 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 he shall be liable to income tax on such total income at the rate of eighteen and one-half per cent.

Applicable –  AMT provision applicable to all Non-Corporate Assessee. From the assessment year 2013-14. Adjusted total income shall be total income before giving effect to this Chapter as increased by the following –

1. Deduction claimed under any section (other than section 80P) included in Chapter VI-A under the heading ‘Deduction in respect of certain incomes’ and;

2. Deduction claimed under section 10AA..

Non-Applicability –

AMT provisions are not applicable to individual, HUF, AOP, BOI and artificial juridical person whose adjusted total income does not exceed INR 20 Lakhs.

How to determine Alternate Minimum Tax:- Following steps are given to compute AMT:-

1) Find out income tax liability of the non corporate assessee under the normal provision of income tax. (Not apply AMT provisions).

2) Find out the adjusted total income of the non corporate assessee U/s 115JC (2).

3) Calculate Alternate Minimum Tax on adjusted total income 18.5% + applicable surcharge and cess.

4) If amount computed under step1 is equal to or more than amount determined under step 3, then provision of AMT will not be applicable. However amount computed in step 3 is more than amount computed under step 1 then-

a. income determined under step 2 will be deemed as total income of thenon corporate assessee for such previous year and

b. tax liability computed under step 3 will be deemed as tax liability of thenon corporate assessee for such previous year.

Computation Of Adjusted Total Income:

Total Income of the assessee under normal provisions of the Act xxx
ADD:
Deduction claimed under Chapter VI heading C (  80 H to 80 RRB except u/s 80P )  
Deduction claimed under section 10AA Xxx
Deduction claimed under section 35AD Xxx
LESS:
Depreciation allowed u/s 32 of the Act as if no deduction u/s 35 AD in respect of such assets was allowed. (Xxx)
Adjusted Total Income Xxx

Tax Credit for Alternate Minimum Tax U/s 115JD.

1. The tax credit of an assessment year to be allowed only if alternate minimum tax paid over the regular income tax payable of that year.

2. Amount of tax credit shall be carried forward and set off. But such carry forward tax credit amount shall not be allowed beyond the tenth assessment year. Means the remaining credit amount which is not fully set off upto ten assessment years not allowed as credit. In other words we can say remaining tax credit amount lapsed.

3. In any assessment year in which  regular income taxmore than alternate minimum tax, then the tax credit shall be allowed to set off to the extent of the excess of regular income tax over the alternate minimum tax.

For Example:-  A Non-Corporate aseesee running a business and claimed deduction under any section 80H to 80RRB (except 80P) or U/s 10AA.His tax liability are as follows-

Assessment year Regular  tax liability Alternate Minimum tax  payable
2016-17 22 Lakhs 30 Lakhs
2017-18 21 Lakhs 19 Lakhs

Solution:-

a. Assesse shall liable to pay regular income tax or alternate minimum tax ,whichever is higher.

For A.Y. 2016-17, alternate minimum tax is higher than regular income tax liability, so assessee shall liable to pay 30 lakh as income tax. 8 lakh (30-22) shall be carry forward to next assessment year (2017-18).

b. In Assessment year 2017-18, Assessee has to pay 21 lakh less brought forward Alternate Minimum Tax credit. 2 lakh (21-19) allowed to set off from tax liability.

From brought forward 8 lakh AMT tax credit, 2 lakh allowed to set off and remaining 6 lakh shall be carried forward to the succeeding assessment years.

Obtain a report in Form 29C:-  Where Alternate Minimum Tax is payable for an assessment year, the tax payer has to obtain a report in form 29C from a chartered accountant certifying that the adjusted total income and the alternate minimum tax have been computed in accordance  with the provision. This report is to be submitted to the assessing officer on or before due date U/s 139(1). Report can be filed electronically along with the return of income.

Key Notes:-

1. Regular income tax means the income tax payable for a previous year by Non-Corporate assessee in accordance with the provision of this Act other than the provision of section 115JC to 115JF.

2. Where assessee being a company Minimum Alternate Tax (MAT) is computed on the book profit of the company.

3. Non-Corporate assesse can claim deduction U/s 80C to 80G.

4. Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to a non-corporate referred to in this Chapter. Hence, all other provisions relating to Advance tax, interest under sections 234A, 234B and 234C penalty, etc. shall apply to such non-corporate also.

5. 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).

6. MAT Credit of Company is not allowed to be carried forward in the hands of LLP on conversion of Company into LLP.

7. Deductions u/s 80 C to 80GGc,80 U and 80P are not to be added back in calculation of Adjusted Total Income.

8. Even if in any subsequent year the chapter of 115JC is not applicable, the assessee can claim credit in such previous year.

(Author is a CA Student and can be reached at E-Mail-: lakeshkr@gmail.com)

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(Republished With Amendments)

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9 responses to “Alternate Minimum Tax For Non Corporate Assessee”

  1. Ninad says:

    What about individual whose whole income is shown business income and has carry forward losd

  2. Krishna K says:

    No, 115JC is applicable to an Individual, HUF, AOP, BOI and AJP only if,

    1. The person is claiming deduction u/s 80H to 8RRB, 10AA or 35AD, and;
    2. The adjusted total income for such person exceeds Rs. 20,00,000/-

  3. Durgesh Kumar Gupta says:

    Thanks,
    very helpful

  4. Shubham Tibra says:

    Very Helpful. Thank You.

  5. lokesh jain says:

    Is provision of AMT applicable to Senior Citizen having capital gains income

  6. Madhavi says:

    very helpful
    Thanks

  7. PIYUSH says:

    Thanks for giving good explanation. but please give the basic idea of Adjusted total income.

  8. Rajesh singh says:

    IS 115JC is applicable for a person having Income from salary & Interest above Rs 2000000/-

    As per sec 115JC it is applicable to all Non-Corporate Assessee

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