Vamsi Lade
(Student CA IPCC)
(40 Points)
Replied 05 November 2017
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
AMT Credit
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.
CAclubindia
