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CHAPTER 18 B: ALTERNATIVE MINIMUM TAX
1. AMT provisions shall apply to any person who has claimed deduction under:
a. Section 10AA; or
b. Section 35AD; or
c. Section 80JJAA, Section 80QQB & Section 80RRB
2. AMT provisions are applicable for all assesses (individuals, huf, firms) except companies.
3. NO AMT: AMT provisions shall NOT apply to an Individual or HUF if the Adjusted Total
Income of such person does not exceed Rs.20 lakhs.
4. AMT rate is calculated @ 18.5% plus surcharge and education cess
5. Tax Liability is computed as under:
a. Tax on Total Income as per the normal provisions; and
b. AMT @ 18.5% on the Adjusted Total Income (whichever is higher)
6. Adjusted Total Income u.s.115JC is computed as follows:
Step 1: “Taxable Income” as per the normal provisions xxx
Step 2: Add: Deduction claimed (3 items):
u.s.80IA to 80RRB (except 80P) xxx
u.s.10AA xxx
u.s.35AD (net of depreciation allowed) xxx
Step 3: Adjusted Total Income xxx
7. AMT CREDIT: Excess tax paid on account of AMT shall be carried forward as “AMT Credit” for
a period of 15 years and can be set off against future tax liability.
8. For each assessment year, two computations are required to be made:
a. Total income under the normal provisions of the Act; and
b. Adjusted Total Income under the provisions of Section 115JC
PROBLEMS:
1. Compute the tax payable by Mr.A & by Mr.B for A.Y.2023-24:
Particulars Mr.A Mr.B
Total Income (after deduction u.s.10AA) 40,00,000 10,00,000
Deduction claimed u/s.10AA 25,00,000 8,50,000
Also compute the amount of AMT credit to be carried forward.
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2. Mr.R (age 62 years) furnishes the following information for the year ending 31.03.2023:
Income from business Rs.20,00,000 (set up in SEZ)
Deduction u.s.10AA Rs.10,00,000
Income from royalty (lump-sum) from books Rs.5,00,000 (qualifies for deduction u.s.80QQB)
Income from other sources Rs.1,00,000 (including interest on fixed deposit with SBI Rs.72,000)
Deduction u.s.80C Rs.1,50,000
Compute total income and tax liability for AY 23-24.
3. Mr.X, an individual set up an unit in SEZ in the financial year 2018-19 for production of
washing machines. The unit fulfills all the conditions of Section 10AA.
During the financial year 2021-22, he has also set up a warehousing facility in a district of
Tamil Nadu for storage of agricultural produce. He fulfills all the conditions of Section 35AD.
Capital expenditure in respect of warehouse amounted to Rs.75 lakhs (including cost of land
Rs.10 lakhs), the payment of which has been made by an account payee bank draft. The
warehouse became operational with effect from 1st April, 2022 and the expenditure of Rs.75
lakhs was capitalized in the books on that date.
Relevant details for the financial year 2022-23 are as follows:
Profit of unit located in SEZ Rs.40,00,000
Export sales of above unit Rs.80,00,000
Domestic sales of above unit Rs.20,00,000
Profit from operation of warehousing facility (before
considering deduction u.s.35AD) Rs.1,05,00,000
Compute income tax (including AMT u.s.115JC) payable by Mr.X for A.Y.2023-24.
4. Mr.Uttam presents you following data related to his tax liability for A.Y. 2023-24:
Particulars Rs. in lakhs
Tax Liability as per regular provisions of Income-tax Act. 1961 15
Tax Liability as per section 115JC 12
AMT credit brought forward from A.Y. 2022-23 5
What shall be the tax liability of Mr.Uttam for A.Y. 2023-24?
1. Rs.12 lakhs
2. Rs.15 lakhs
3. Rs.10 lakhs
4. Rs.7 lakhs
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5. Mr.A, a resident, commenced operations of the business of a new three-star hotel in Pune,
Maharashtra on 1.4.2022. He reports a net profit of Rs.26,00,000 after deduction of the
following items:
i. Depreciation as per books of accounts Rs.25,80,000.
ii. Interest on bank loan includes an amount of Rs.1,80,000 not paid before the due
date of filing IT return.
Mr.A purchased a new motor car for the above business for Rs.7 lakh on 10th March, 2022 and
capitalized the same in its books of account as on 1st April, 2022. Further, in April, 2022, he
incurred capital expenditure of Rs.2 crores (out of which Rs.1.50 crores was for acquisition of
land and Rs.50 lakhs on building) exclusively for the above business. Mr.A also installed and
put to use new centralized air conditioners on 15.5.2022 costing Rs.3,20,000. The capital
expenditure incurred by Mr.A were paid by account payee cheque or use of ECS through bank
account.
He also has another existing business of running a four-star hotel in Mumbai, which
commenced operations fifteen years back, the profits from which are Rs.41,38,000 computed
as per Income-tax Act for the A.Y.2023-24.
Compute total income and tax payable by Mr.A for the A.Y.2023-24, assuming that Mr.A has
fulfilled all the conditions specified for claim of deduction u.s. 35AD and opted for claiming
deduction u.s. 35AD; and has not claimed any deduction under Chapter VI-A under the heading
“C. – Deductions in respect of certain incomes”. Assume that Mr.A has not opted for provisions
of Section 115BAC.
