Hi Frenz,as the Tax audit season is going on, u are all busy in filing return of income. One of the Interesting portion in our profession is Tax computation. Whoever the assessee may be, whether corporate or non corporate, whether 44AB case or Non 44AB case, tax computation is must. While calculating tax for Corporate we have to calculate Tax under section 115JB i.e., Minimum Alternate tax (MAT). Under the existing provisions of the Income-tax Act, Minimum Alternate Tax (MAT) is levied on companies and limited liability partnerships (LLPs) respectively. No such tax is levied on the other form of business organisations such as partnership firms, sole proprietorship, association of persons, etc.
In order to widen the tax base vis-à-vis profit linked deductions, it is proposed to amend new tax called Alternate Minimum Tax (AMT).
Alternate Minimum Tax:
The provisions regarding AMT contained in Chapter XII-BA in the Income-tax Act.
Applicable to whom?:
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.
Applicable rate: 18.5%
Tax Computation Under AMT:
AMT Shall be computed on Adjusted Total Income at the rate prescribed above. i.e., 18.5%.
For the purpose of the section, “Adjusted Total Income” shall be the total income before giving effect to provisions of Chapter XII-BA as increased by the deductions claimed under any section (other than section 80P) included in Chapter VI-A under the heading “C – Deductions in respect of certain incomes” and deduction claimed under section 10AA;
When Assessee has to pay tax Under AMT:
Where the regular income-tax payable for a previous year by a person (other than a company) is less thanthe 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 at the rate of eighteen and one-half per cent.
For the above purpose “regular income-tax” shall be the income-tax payable for a previous year by a person other than a company on his total income in accordance with the provisions of the Act other than the provisions of Chapter XII-BA.
Non Applicability:
The provisions of AMT under Chapter XII-BA shall not apply to:
1. an individual or
2. a Hindu undivided family or
3. an association of persons or
4. a body of individuals (whether incorporated or not) or
5. 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.
Beneficial to Persons who pay Tax under AMT:
It is also provided that the credit for tax (tax credit) 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 over the regular income-tax. This tax credit 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 the excess of the regular income-tax over the AMT.
Other Amendments with regard to AMT:
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.
Alternate Minimum Tax will take effect from 1st April, 2013 and will, accordingly, apply in relation to theassessment year 2013-14 and subsequent assessment years.
Hope, you can understand the provisions for Alternate Minimum Tax. This provision is similar (NOT SAME) to Minimum Alternate Tax.
Tq.
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