CA Rohit Krishan Varshney
Background and Provisions
The Alternate Minimum Tax (AMT) is income tax imposed by the United States federal government on individuals, corporations, estates and trusts. The AMT was enacted in 1982.
This concept was taken by India in the Finance Act, 2011. Finance Act, 2011 introduced a new “Chapter XIIBA” to provide payment of Alternate Minimum Tax (AMT) by LLPs and after that it has been amended by Finance Act, 2012 in which it is covered all non-corporate assesses. However, AMT is not payable by Individual, HUF, Association of Persons/ Body of Individuals and Artificial judicial person if adjusted total income of such person does not exceed Rs 20 Lac.
The AMT is required to be paid at the rate of eighteen and half percentage as increased by Health and Education cess i.e. 19.24%. The AMT is payable only if the tax payable under the normal provision is lesser than AMT.
However wef A.y 2019-20 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.
AMT will also apply to the assesses claiming profit linked deductions Part C of Chapter VI-A i.e. under section 80-IA to 80RRB and under section 10AA and under section 35AD. However, deduction under section 80P shall not be added back. Also Deduction under section 80C to 80GGC, Section 80U and Section 80TTA shall not be added back.
Further we have to say that if a person claims deduction under section 35AD, then he is not eligible to claim deduction under section 80-IA/ 80-IB/ 80-IC/ 80-ID.
The assessee has profits and gains of business or profession on presumptive basis under section 44AD, 44AE, 44B, 44BB, 44BBA and 44BBB. Section 44AD. 44ADA does not apply to taxpayers claiming profit linked tax holiday. Therefore, total income is computed taken into account profits and gains of business or profession on presumptive basis. If the assessee is eligible to take deduction under section 10AA or deduction under Chapter VI-A or 35AD, then such deductions shall be added back to the total income for computation of adjusted total income.
Calculation of Adjusted Total Income
Total income as per normal provision of Income Tax Act xx
Add: Deduction under Part C of Chapter VI-A (Except Section 80P) xx
Add: Deduction under section 1 0AA (Profits of SEZ units) xxAdd: Deduction claimed, if any, under section 35AD as xx
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.
AMT Credit
115JD (1) The credit for tax paid by a person under section 115JC shall be allowed to him in accordance with the provisions of this section.
(2) The tax credit of an assessment year to be allowed under sub-section (1) shall be the excess of alternate minimum tax paid over the regular income-tax payable of that year:
However where the amount of tax credit in respect of any income-tax paid in any country or specified territory outside India under section 90 or section 90A or section 91, allowed against the alternate minimum tax payable, exceeds the amount of the tax credit admissible against the regular income-tax payable by the assessee, then, while computing the amount of credit under this sub-section, such excess amount shall be ignored.
(3) No interest shall be payable on tax credit allowed under sub-section (1).
(4) The amount of tax credit determined under sub-section (2) shall be carried forward and set off in accordance with the provisions of sub-sections (5) and (6) but such carry forward shall not be allowed beyond the fifteenth assessment year immediately succeeding the assessment year for which tax credit becomes allowable under sub-section (1).
(5) In any assessment year in which the regular income-tax exceeds the alternate minimum tax, the tax credit shall be allowed to be set off to the extent of the excess of regular income-tax over the alternate minimum tax and the balance of the tax credit, if any, shall be carried forward.
(6) 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.
Illustration-
Ques:- If a LLP has net profit as per profit and loss account relating to the year ended on 31/03/2018 Rs 248 Lac and paid Rs 2 Lac as advertisement published in the souvenir released by BJP. Deduction of Rs 200 Lac is also available to the LLP. Compute the tax liability.
Ans:- Computation of Total Income
| Particulars | (Rs In Lac) |
| Gross Total Income | 248.00 |
| Less: Deduction U/S 80GGC | 2.00 |
| Less: Deduction U/S 80-IE | 200.00 |
| Total Income | 46.00 |
| Tax Liability @ 31.2% | 14.352 |
Computation of Adjusted Total Income
| Particulars | (Rs In Lac) |
| Total Income | 46.00 |
| Add: Deduction U/S 80-IE | 200.00 |
| Adjusted Total Income | 246.00 |
| Tax Liability @ 19.24% | 47.3304 |
| Tax Payable (Higher of Tax on Adjusted Total Income and Total Income) | 47.3304 |
| AMT Credit | 32.9784 |
| AMT can be carried forward upto Assessment Year 2033-34. | |
Report
As per section 115JC of the Income Tax Act, 1961, an assessee is liable to AMT should obtain a report in Form No- 29C prescribed under Rule 40BA from CA certifying the adjusted total income and the alternate minimum tax duly computed and furnish the report on or before the due date of filing the return u/s 139(1).
ICAI Guidance Note
ICAI through a Guidance Note clarified the following points to be included in CA reports-
The report consists of three paragraphs-
1- The First paragraph contains the declaration about the examination of accounts and records of non- corporate assessee in order to arrive at adjusted total income and the alternate minimum tax.
2- The Second paragraph involves certification of computation of adjusted total income and the alternate minimum tax and also the tax payable under section 115JC.
3- The Last paragraph requires expression of the opinion that the particulars given in Annexure A are true and correct.
Further ICAI clarified that Annexure A consists following points-
1- Name of the Assessee
2- Address of the Assessee
3- Permanent account Number
4- Assessment Year
5- Total Income of the Assessee as per manner laid down in Income Tax Act.
6- Income Tax Payable on total income referred in column 5 above.
7- The amount of deduction claimed under Part C of Chapter VI-A (except section 80P)
8- The amount of deduction claimed under section 1 0AA
9- 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.
10- Adjusted total income of the assessee (5+7+8+9)
11- Alternate Minimum Tax (19.24% of column 9 above)
Conclusion
- It can be concluded that the ICAI has imposed the higher responsibility on the CA to examine the records and certifying the correct Alternate Minimum Tax through his report.
- It is a good concept to collect the minimum tax revenue from higher income earning assesses and restricts the tax evasion.
- The Government is able to plan the future programmes for the further development.
- Now a day, devaluation of rupees is a main problem for the India. So imposition of this tax will reduce the luxury good’s demand like gold etc. and save the rupees value.
Author’s opinion
If Government abolishes the present tax slabs rate and implement a fixed rate 18.5% for every assessee, then Government can be collected higher revenue in comparison to the present revenue. In this way, almost all assesses can be in the sphere of tax.
(Author is a member of ICAI. He can be reached at +91 9911000290 or [email protected].)
(Republished With Amendments)
One of my client is moving out of SEZ unit to DTA unit. Can the AMT Credit be utilised after moving out of SEZ unit? If so, which rule of Income tax says it?
I have read your article on AMT. 1) I am a retired from BSNL, Resident and Individual. My income comprises of Ex gratia, pension, interest from bank, insurance commission and short term gain from shares etc. 2) Due to capital gains on shares, I file my return in ITR 2. After submitting my return for AY 20-21 above Rs 45 lacs, I had recieved a notice under section 143(1) from CPC Income tax department as “Deemed income under section 115JC (3 of schedule AMT)” to pay more tax. I will be highly obliged for your clarification.
If a partnership firm was covered under 115JC in preceeding years during which credit for tax paid by the firm u/s 115JC was available, but during current assessment year the firm is not covered U/s 115JC, will tax paid by the firm u/s 115JC during precceding years be allowed to be claimed in the current assessment year i.e. during the year when the firm is not covered U/s 115JC.
Respected Sir/Madam , I Was filing the ITR -3 For AY 20-21 after putting whole data in book not maintained table net profit is 259000 but sir in the page of total income (TI) profit was showing under deemed income 115 JC while i have not taken any deduction like under Section
(10 AA) , 35 AD and (80 I A to 80 RRB) Sir Could you help about to why it was showing under income 115 JC I would very kind of you sir.
Thanku
I have read your article on AMT.
1) I am a senior citizen, Resident and Individual. My income comprises of pension, interest from bank and company deposits etc.
2) Due to capital gains on shares, I file my return in ITR 2. While preparing my return for AY 19-20, I find that computation of total income (Part B, TI) leads to reflection of Total Income as “Deemed income under section 115JC (3 of schedule AMT)”. This reflection seems to be new this year.
3) I want to confirm whether the above is correct or there is some mistake in software or my data feeding etc.
I will be highly obliged for your clarification.
Does section 115JC apply to trust Whose income Does not exceed Rs.20Lacs
Hi. Can SEZ (firm) also take credit of AMT after finish it Ten years.
Nice article, my compliments to you, I would like to know if the partnership firm has Income with out claiming any exemptions/deductions, and have set off of CARRY FORWARD LOSS, whether AMT is applicable as they are setting off the loss and not paying any tax. I will be thnkfull for the replay.
IF WE HAVE AVAILED DEDUCTION U/S 35AD IN LAST YEAR AND LAST YEAR AMT (Alternative Minimum Tax) IS NOT APPLICABLE IN CASE OF AVAILMENT OF 35AD DEDUCTION. NOW WE ARE CONFUSED ABOUT TO APPLICABILITY OF AMT IN CASE OF AVAILING LOSS CARRY FORWARD AND SET OFF IN CURRENT PREVIOUS YEAR.
REPLY AS SOON AS POSSIBLE…….
@suma. 80GGC deduction not considered because deduction claimed under Chapter VI-A heading “C” only to be added back and 80GGC doesn”t come in heading “C”.
Sir,
What will be the status of AMT Credit set off in the year in which if we doesn’t claim any deduction due to which AMT is payable i.e. AMT provisions not applicable for tax calculation.
In the calculation of Adjusted Total Income, why hasn’t 80GGC deduction been considered?