Does Presumptive Scheme vs AMT vs SEZ conflict each other on Income tax

Hey Mack, you’re asking some important questions about how Presumptive Taxation, AMT (Alternate Minimum Tax), and SEZ Income Tax exemptions interact. Let me clarify how these rules work together:

1. Presumptive Taxation Scheme (Section 44AD)

Under presumptive taxation (for turnover up to ₹2 crore), you declare income at 8% (or 6% if digital payments) of turnover.
You pay tax on this declared income at normal slab rates.
You cannot claim other business expenses separately.
You file normal ITR (ITR-4) using presumptive income.

2. Alternate Minimum Tax (AMT) under Section 115JC

AMT applies if you claim deductions or exemptions that reduce your taxable income below 18.5% of adjusted total income (with some specifics).
AMT rate is 15% on adjusted total income.
AMT is mainly to ensure minimum tax is paid by companies or entities enjoying exemptions/deductions.
Presumptive income is generally not adjusted for AMT because you are not claiming deductions under Chapter VI-A.

3. SEZ Income Tax Exemption under Section 10AA

Income of an SEZ unit from export business is eligible for 100% income tax exemption for first 5 years, subject to conditions.
However, AMT still applies to SEZ units, so you may pay AMT even if normal tax is zero due to exemption.
This means the AMT acts as a minimum tax safeguard.

Your Scenario — What happens?

You declare ₹30 lakh profit under presumptive scheme (6% of turnover is taxable income), so taxable income is 30 lakh, tax calculated normally.
If you have no other deductions or exemptions, AMT does not apply because your tax liability under normal tax rules is higher than AMT.
But if you claim SEZ exemption under 10AA to reduce taxable income to zero, then AMT will kick in. Because AMT ignores many exemptions, you will pay tax at 15% on your adjusted total income (₹30 lakh).
So, even if your income is tax-exempt under SEZ rules, AMT can require you to pay tax on that income.

Summary:

Situation	Tax Outcome
Presumptive income without SEZ exemption	Normal tax applies, no AMT
Income fully exempt under SEZ 10AA	Normal tax = 0, but AMT applies
Income with deductions/exemptions other than SEZ	AMT may apply if normal tax < AMT

Important Points:

Presumptive taxation income is rarely affected by AMT unless you claim additional deductions or exemptions.
SEZ exemption and AMT are in conflict, meaning you may pay AMT despite zero normal tax liability due to SEZ benefits.
AMT credit can be carried forward for 15 years and adjusted against future regular tax liabilities.