Alternate Minimum Tax/Minimum Alternate Tax on the person other than Company

Alternate Minimum Tax/Minimum Alternate Tax on the person other than Company

The concept of Minimum Alternative Tax (MAT) or Alternative Minimum Tax (AMT) has been introduced under the Income tax to tax the “zero rate” companies i.e , company earning high profit but paying less or no tax. It happens due to the various exemptions, deductions, incentives granted by the Income Tax law.

Generally a company is liable to pay MAT/AMT if its regular Income tax is less than the MAT/AMT in the previous year.

Presently MAT provisions are applicable to Companies and to Limited Liability partnership but other Assesee like
Individual, Hindu Undivided Family, Association of Persons or Body of Individuals are not covered under the provisions of Minimum Alternative tax, but now budget 2012-2013 proposed to  substitute the present provision and make these persons liable for Alternative Minimum Tax (AMT) provided they fall in the parameter given.

Under the proposed amendments, where the 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 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 however it has been provided that this provision will not apply to Individual, HUF,AOP/BOI, if their adjusted total income does not exceed Rs.20/- lakhs in the previous year.

Condition for applicability of the AMT/MAT can be summarized as under:-

Who is liable for AMT:-

<!--[if !supportLists]-->(1)    <!--[endif]-->In case of Individual/HUF/AOP BOI,

(a) his regular income tax is less than the alternate minimum tax for the previous year, and (b)adjusted total Income is Rs. twenty lakhs or more during the previous year

<!--[if !supportLists]-->(2)    <!--[endif]-->In other case (i.e. Partnership Firm, LLP etc.),  his regular income tax is less than the alternate minimum tax for the previous year

Rate of AMT :-  18.5% on Adjusted Total Income

Meaning of Adjusted total income:-

		Amount - Rs	Amount - Rs
A.	Total Income (Taxable Income) in normal course		XXXXXXXXXX
B.	Add:- Deductions claimed under chapter VI-A under the heading “C” Deduction in respect of certain incomes:-
	<!--[if !supportLists]-->(i)                  <!--[endif]-->Section 80-IA	XXXXXXXXXX
	<!--[if !supportLists]-->(ii)                <!--[endif]-->Section 80 IAB	XXXXXXXXXX
	<!--[if !supportLists]-->(iii)               <!--[endif]-->Section 80 IB	XXXXXXXXXX
	<!--[if !supportLists]-->(iv)              <!--[endif]-->Section 80 IC	XXXXXXXXXX
	<!--[if !supportLists]-->(v)                <!--[endif]-->Section 80 ID	XXXXXXXXXX
	<!--[if !supportLists]-->(vi)              <!--[endif]-->Section 80 IE	XXXXXXXXXX
	<!--[if !supportLists]-->(vii)             <!--[endif]-->Section 80 JJA	XXXXXXXXXX
	<!--[if !supportLists]-->(viii)           <!--[endif]-->Section 80 JJAA	XXXXXXXXXX
	<!--[if !supportLists]-->(ix)              <!--[endif]-->Section 80 LA	XXXXXXXXXX
	<!--[if !supportLists]-->(x)                <!--[endif]-->Section 80 QQB	XXXXXXXXXX
	<!--[if !supportLists]-->(xi)              <!--[endif]-->Section 80 RRB	XXXXXXXXXX
	<!--[if !supportLists]-->(xii)             <!--[endif]-->Some other sections also come within	XXXXXXXXXX	XXXXXXXXXX
C.	Deduction U/S-10AA- Applicable to SEZ Units		XXXXXXXXXX
Adjusted Total Income----à			XXXXXXXXXX

		CASE- 1		CASE- 2		CASE- 1		CASE- 2
		Individual say Mr.X		Individual say Mr.Y		Partnership Firm-X		Partnership Firm-Y
	Particulars	Amount - Rs	Amount - Rs	Amount - Rs	Amount - Rs	Amount - Rs	Amount - Rs	Amount - Rs	Amount - Rs
A.	Total Income (Taxable Income) in normal course		1250000		1250000		150000		150000
B.	Add:- Deductions claimed under chapter VI-A under the heading “C” Deduction in respect of certain incomes:-
	(i)                  Section 80-IA	200000		200000		200000		200000
	(ii)                Section 80 IAB	40000		400000				400000
	(iii)               Section 80 IB
	(iv)              Section 80 IC
	(v)                Section 80 ID
	(vi)              Section 80 IE	100000		300000				300000
	(vii)             Section 80 JJA
	(viii)           Section 80 JJAA
	(ix)              Section 80 LA
	(x)                Section 80 QQB
	(xi)              Section 80 RRB
	(xii)             Some other sections also come within		340000		900000		200000		900000
C.	Deduction U/S-10AA- Applicable to SEZ Units		0				0
Adjusted Total Income----à			1590000		2150000		350000		1050000
	MAT @18.5% on Adjusted Total Income	(A)	294150		397750		64750		194250
	Regular Income Tax	(B)	272950		272950		108150		108150
Condition 1	If Adjusted total Income >= Rs.20 lakhs	No	MAT NOT APPLICABLE	YES	MAT APPLICABLE	N.A.	No need to meet this condition	N.A.	No need to meet this condition
Condition 2	If (B) is less than (A)	Yes	MAT APPLICABLE	YES	MAT APPLICABLE	NO	MAT NOT APPLICABLE	YES	MAT APPLICABLE
	Conclusion		Not applicable		APPLICABLE

	Tax On Regular Income
	In Normal course	Individual/HUF		Partnership or others except company
	Rate of Tax	Income slab	Tax on slab	Rate of Tax
	Nil                                      up to Rs.2,00,000/-	up to Rs.200000	0	30%	105000
	@10%  From Rs.200001 to Rs.5,00,000/-	3,00,000	30000
	@20%    From Rs.500001 to Rs.10,00,000/-	5,00,000	100000
	@30%                         Beyond Rs.10,00,000/-	4,50,000	135000
	Total	12,50,000	265000
	Add :-Education Cess & SHEC @3% on I.Tax		7950		3150
	Regular Income Tax	(B)	272950		108150