CA Nirmal Ghorawat's Blog

1. Chapter XII-BA for levy of Alternative Minimum Tax on persons other than a company have been inserted by the Finance Act, 2011 w.e.f. Assessment Year 2012-13.
2. Charge of Alternative Minimum Tax (Section 115JC(1))

Applicable To : a person other than a company

Condition : if Regular Income Tax < (is less than) Alternate Minimum Tax

Alternate Minimum Tax : @ 18.5% of Adjusted Total Income

3. Computation of Adjusted Total Income (Section 115JC(2))

Total Income of the assesse

(after claiming all deductions under Chapter VI-A)

Add: Amount claimed as deductions under the Heading – C

Of Chapter VI-A, viz., 80IB, 80IC, 80ID, 80IE, etc

Add: Deduction claimed u/s 10AA

Adjusted Total Income

4. If Adjusted Total Income is less than 20 lakhs, the provisions of this Chapter are not applicable. (Section 115JEE(2)).
5. Audit report in Form 29C to be furnished by the assessee to whom Section 115JC applies. (Section 115JC(3))
6. Adjustment of Tax Credit for Alternative Minimum Tax against Regular Income Tax (Section 115JD)
7. Alternative Minimum Tax can be carried forward for 10 succeeding Assessment Years.
8. the amount of Tax Credit that can be set off shall be the excess of “Regular Income Tax” less (-) “Alternate Minimum Tax” for that Assessment year.

Tax Planning :

Minimum Alternative Tax / AMT regime creates an opportunity to have an effective Income Tax Rate of 18.5%, without carry forward of Tax Credit in future, if both deductible and non-deductible incomes are taxed in the hands of the same assessee.

If we take into account the time value of money, this should afford better returns to investor, vis-à-vis separate entities.