Alternate Minimum Tax [AMT] for Non-Corporate Assessee

Alternate Minimum Tax (AMT) For Other Than Corporate Assessee – From A.Y. 2013-14 .-Section 115JC TO 115 JF

Meaning- 

Alternate minimum tax means the Amount of tax computed on the adjusted total income.AMT is a way collecting the minimum tax from the tax payers. Assessee shall be liable to pay tax on such income at a rate eighteen and one-half per cent (18.5%).It is not an additional tax levied on the taxpayer.

Before the Assessment year 2013-14, this Section 115JC was applicable only on Limited Liability Partnership. Now from the assessment year 2013-14 this section has been amended and covers all non corporate assessee (including Limited Liability Partnership).

Provision relating to such tax given in the Act as under:-

Acc.to Section 115JC (1). Notwithstanding anything contained in this Act, where regular income tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to income tax on such total income at the rate of eighteen and one-half per cent.

Applicable 

AMT provision applicable to all Non-Corporate Assessee. From the assessment year 2013-14, provision of AMT applicable only if the assessee has claimed any deduction under section 10AA or 80H to 80RRB (Except section 80P).

If the assessee is an Individual,HUF,AOP,BOI or an artificial juridical person and the adjusted total income for the year is 20 Lakh or less , then the provision of alternate minimum tax is not applicable. To remove doubt see table given below:-

Assessee	Assessment year 2013-14 onwards
Limited Liability Partnership.	Applicable
Any other firm.	Applicable
Individual,HUF,AOP,BOI,Artificial juridical person.	Applicable if adjusted total income exceeds Rs. 20 lakh.
Any other person. (not being a company)	Applicable

Adjusted Total Income U/s 115JC (2):- 

Adjusted total income means, total income of the assessee on which he is liable to pay income tax, is increased by-

a) Deduction claimed, if any under the heading “C-Deductions in respect of certain incomes’’(U/s 80H to 80RRB) except section 80P and

b) Deduction claimed, if any U/s 10AA (SEZ).

How to determine Alternate Minimum Tax:- 

Following steps are given to compute AMT:-

1) Find out income tax liability of the non corporate assessee under the normal provision of income tax.(Not apply AMT provisions).

2) Find out the adjusted total income of the non corporate assessee U/s 115JC (2).

3) Calculate Alternate Minimum Tax on adjusted total income @ 19.055%. (18.5%+ES+SHEC).Add surcharge in tax rate if any.

4) If amount computed under step1 is equal to or more than amount determined under step 3, then provision of AMT will not be applicable. However amount computed in step 3 is more than amount computed under step 1 then-

a. income determined under step 2 will be deemed as total income of the non corporate assessee for such previous year and

b. tax liability computed under step 3 will be deemed as tax liability of the non corporate assessee for such previous year.

Tax Credit for Alternate Minimum Tax U/s 115JD.

1. The tax credit of an assessment year to be allowed only if alternate minimum tax paid over the regular income tax payable of that year.

2. Amount of tax credit shall be carried forward and set off. But such carry forward tax credit amount shall not be allowed beyond the tenth assessment year. Means the remaining credit amount which is not fully set off upto ten assessment years not allowed as credit. In other words we can say remaining tax credit amount lapsed.

3. In any assessment year in which regular income tax more than alternate minimum tax, then the tax credit shall be allowed to set off to the extent of the excess of regular income tax over the alternate minimum tax.

For Example:- A Non-Corporate aseesee running a business and claimed deduction under any section 80H to 80RRB (except 80P) or U/s 10AA.His tax liability are as follows-

Assessment year	Regular tax liability	Alternate Minimum tax payable
2013-14	22 Lakhs	30 Lakhs
2014-15	21 Lakhs	19 Lakhs

Solution:-

a. Assesse shall liable to pay regular income tax or alternate minimum tax ,whichever is higher.

For A.Y. 2013-14, alternate minimum tax is higher than regular income tax liability, so assessee shall liable to pay 30 lakh as income tax. 8 lakh (30-22) shall be carry forward to next assessment year (2014-15).

b. In Assessment year 2014-15, Assessee has to pay 21 lakh less brought forward Alternate Minimum Tax credit. 2 lakh (21-19) allowed to set off from tax liability.

From brought forward 8 lakh AMT tax credit, 2 lakh allowed to set off and remaining 6 lakh shall be carried forward to succeeding assessment years.

Obtain a report in Form 29C:-

Where Alternate Minimum Tax is payable for an assessment year, the tax payer has to obtain a report in form 29C from a chartered accountant, which certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provision. This report is to be submitted to the assessing officer on or before due date U/s 139(1).

Key Notes:-

1. Regular income tax means the income tax payable for a previous year by Non-Corporate assessee in accordance with the provision of this Act other than the provision of section 115JC to 115JF.

2. Where assessee being a company Minimum Alternate Tax (MAT) is computed on the book profit of the company.

3. Non-Corporate assesse can claim deduction U/s 80C to 80G.

Written by – Lakesh Kumar, E-Mail:-lakeshkr@gmail.com