Budget 2012 – Alternate Minimum Taxes for All

Under the existing provisions of Income Tax Act, 1961 AMT (Alternate Minimum Tax) was applicable only on Limited Liability Partnerships (LLP’s). But the new budget proposed by Finance Minister has amended the provisions under section 115JC. As per the new budget, AMT would be applicable on all assessees (except Company) be it a partnership firm, an Association of Persons, or a sole proprietorship. APPLICABILITY AMT would be applicable on all persons, other than a Company, who claim deduction under any section (other than section 80P).   EXCEPTION AMT would not be applicable on those individuals, Hindu undivided family , AOP or a body of Individuals whose total adjusted income is less than Rs. 20lacs. TAX TO BE PAID ON If the Income Tax payable for the previous year by a person (other than a Company) is less than the Alternate Minimum Tax  payable for such previous year , then the Adjusted Total Income shall be the Total Income of that person and he shall be liable to pay tax on the adjusted total income @ 18.5%. ADJUSTED TOTAL INCOME As discussed above 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. TAX CREDIT ALLOWED Under the new budget if AMT exceeds the regular Income Tax payable, then Tax credit on account of AMT will be allowed only on the excess amount of AMT paid by the person. Further, the tax credit shall be allowed to be carried forward up to the 10th 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. EFFECTIVE DATE The new amendment shall be effective from 1st April, 2013 and will apply in relevant years.

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