Budget 2012 – Alternate Minimum Tax (AMT) on all non-corporate Assessees

The Finance Bill, 2012 has proposed to amend provisions regarding AMT contained in Chapter XII-BA in the Income-tax Act to provide that a person other than a company, who has claimed deduction under any section (other than section 80P) included in Chapter VI-A under the heading “C – Deductions in respect of certain incomes” or under section 10AA, shall be liable to pay AMT in the same manner as has been prescribed under the Act with respect to LLPs.

The adjusted total income has been defined to mean total income of the assessee (before giving effect to this chapter) as increased by deduction claimed: –

   •  under any section (other than section 80P) included in Chapter VI-A under the heading “C – Deductions in respect of certain incomes” or

   •  under section 10AA,

Under the proposed amendments, 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 such person and he shall be liable to pay income-tax on such total income @ 18.5%.

However, it is proposed that the provisions of AMT under Chapter XII-BA shall not apply to an individual or a Hindu undivided family or an association of persons or a body of individuals (whether incorporated or not) or an artificial juridical person referred to in section 2(31)(vii) if the adjusted total income of such person does not exceed twenty lakh rupees.

It is also provided that the credit for tax paid by a person on account of AMT under Chapter XII-BA shall be allowed to the extent of the excess of the AMT paid exceeds the regular income-tax. This credit for tax shall be allowed to be carried forward up to the tenth assessment year immediately succeeding the assessment year for which such credit becomes allowable. It shall be allowed to be set off for an assessment year in which the regular income-tax exceeds the AMT to the extent of such excess.

Consequential amendments are also proposed to the provisions of section 140A relating to self-assessment, section 234A relating to interest for defaults in furnishing return of income, section 234B relating to interest for defaults in payment of advance tax and section 234C relating to interest for deferment of advance tax.

These amendments will take effect from 1st April, 2013 i.e. from assessment year 2013-14 and for subsequent assessment years.