MEANING:
Alternate Minimum Tax or AMT was came into existence for non-corporate taxpayers who works on same principles. Though, applicability, exemption, way of adjusting income and reporting requirement etc. differ from Minimum Alternate Tax.
BASICS:
As the name suggests, Alternate Minimum Tax is a minimum tax which is imposed on alternative to normal tax. AMT is chargeable at the rate of 18.5% plus surcharge and cess which is applicable. AMT is a tax which is imposed on ‘Adjusted Total Income’ for Financial Year where tax which is on normal tax is less than AMT on Adjusted Total Income. AMT shall be paid by tax payer on whom it apply irrespective of normal tax.
APPLICABILITY:
Initially the idea of minimum tax was initiate for companies and gradually made applicable to non-corporate taxpayers, after that Finance Act, 2011 launched Alternate Minimum Tax on Limited Liability Partnership and then it was amended in Finance Act, 2012 as it is today.
AMT applies to following taxpayers:
- All non-corporate taxpayers;
- Taxpayer who claims deduction under following:
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- Chapter VI-A under Section 80H to 80RRB which is provided regarding profit and gains of industries which is specified as housing projects, export business, hotel business, infrastructure development. Small scale business etc. Though, deduction which is under section 80P that provides deduction for cooperative society is not the part of this for the purpose.
- Deduction under Section 35AD.
- Deduction under Section 10AA.
So we can conclude that the provision of AMT will be applicable to all the non-corporate taxpayers who has profits or gains from business and profession. Additionally, the provision of AMT is also applicable when normal tax which is payable is lesser than AMT for any Financial Year.
EXEMPTIONS:
Provision of AMT is not applicable to an individual, Hindu Undivided Family, Artificial Judicial Person, Body of Individual, Association of Person whose Adjusted Total Income is not exceeding Rs 20, 00, 000. Consequently, the exemption of monetary threshold of above limit is not applicable for LLP, non-corporate taxpayers and partnership firms.
CALCULATION OF ADJUSTED TOTAL INCOME:
| PARTICULARS | AMOUNT |
| Taxable income (A) | XXXXX |
| Add: Deduction claimed if any under Chapter VI-A from 80H to 80RRB except 80P (B) | XXXXX |
| Deduction claimed if any under Section 10AA (C) | XXXXX |
| Deduction claimed if any under Section 35AD reduced by regular depreciation allowed (D) | XXXXX |
| Adjusted total income (E) = (A)+(B)+(C)+(D) | XXXXX |
| AMT – 18.5% of (E) | XXXXX |
CALCULATION OF TAX LIABILITY WHEN THE PROVISION OF AMT IS APPLICABLE:
| PARTICULARS | AMOUNT |
| Tax liability computed as per normal provisions of the Income-tax Act – normal tax liability | XXXX |
| AMT computed at 18.5% (plus applicable surcharge and cess) on adjusted total income | XXXX |
| Tax liability of taxpayer | Higher of the above |
REPORTING REQUIREMENT:
To all the taxpayer to whom the provision of AMT is applicable have to obtain a report from Chartered Accountant, he will certify that adjusted total income and AMT both have been calculated as per the provision of Income Tax Act. The report shall be filed in Form 29C and shall be filed before due date.
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Author- Adv.Shivam Kumar
Legal and content Executive, Taxblock India Pvt. Ltd
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