Quick Summary
The Income-Tax Bill, 2025, has proposed significant changes to the alternative minimum tax (AMT) framework, potentially increasing the tax burden on partnership firms and limited liability partnerships (LLPs) with long-term capital gains (LTCG). The proposed amendments aim to remove preferential tax treatment for LTCG under the AMT regime and expand its applicability beyond firms claiming deductions under Chapter VI-A of the IT Act, 1961. Key Changes in AMT Provisions Currently, LLPs and par
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FAQ :
The Bill proposes to remove the preferential tax rate for long-term capital gains (LTCG) under the alternative minimum tax (AMT) regime and expand its applicability beyond firms claiming specific deductions.
LLPs and partnership firms with long-term capital gains may face a higher tax burden as the preferential rate of 12.5% for LTCG under AMT is likely to be removed, aligning it with the general AMT rate of 18.5%.
Tax experts believe that by omitting a crucial provision from the IT Act, 1961, the Bill extends AMT applicability to all LLPs and partnership firms, regardless of whether they claim deductions under Chapter VI-A.
Concerns include the potential financial strain on LLPs and partnership firms, unintended consequences from the expanded AMT applicability, and a possible increase in tax outflows for businesses, impacting investment structures.
Currently, deductions under Chapter VI-A include those for infrastructure development (80-IA to 80-IE), job creation (80JJAA), and waste recycling (80JJA).
The Income Tax Bill 2025 is currently under review by a Select Committee in the Lok Sabha.
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