CA Rohit Krishan Varshney
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 education cess and higher secondary education cess i.e. 19.055%. The AMT is payable only if the tax payable under the normal provision is lesser than AMT.
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. However, deduction under section 80P shall not be added back. Also Deduction under section 80C to 80GGC, 80U and 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. So, a person claims deduction under section 35AD is not liable to pay AMT. Therefore, it is beneficial to the assessee to claim deduction under section 35AD rather than 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 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 1 0AA or deduction under Chapter VI-A, 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) xx
Section 11 5JD of the Act provides for tax credit of AMT. The Tax credit is allowed for that assessment year in which AMT is excess than tax payable under normal provisions. The tax credit is allowed for next 10 assessment year in which tax payable under normal provisions is more than AMT.
Ques:- If a LLP has net profit as per profit and loss account relating to the year ended on 31/03/2013 R 248 Lac and paid R 2 Lac as advertisement published in the souvenir released by BJP. Deduction of R 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|
|Tax Liability @ 30.9%||14.214|
Computation of Adjusted Total Income
|Particulars||(Rs In Lac)|
|Add: Deduction U/S 80-IE||200.00|
|Adjusted Total Income||246.00|
|Tax Liability @ 19.055%||46.8753|
|Tax Payable (Higher of Tax on Adjusted Total Income and Total Income)||46.8753|
|AMT can be carried forward upto Assessment Year 2023-24.|
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- Adjusted total income of the assessee (5+7+8)
10- Alternate Minimum Tax (19.055% of column 9 above)
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 firstname.lastname@example.org.)