In this post, we will on Alternate Minimum Tax (AMT) computation in Saral Income Tax. This will also include AMT Credit adjustments.
AMT is a leviable alternative to normal tax. The rate of AMT is 18.5% (plus applicable surcharge and cess).
AMT is a tax levied on ‘adjusted total income’ in a Financial Year. But the tax on normal income is lower than AMT on adjusted total income.
So, irrespective of normal tax, the taxpayers to whom AMT provisions are applicable will have to pay AMT
AMT is applicable to an individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI) and the artificial juridical person whose adjusted total income exceeds Rs. 20,00,000.
AMT provisions are applicable to the following taxpayers:
• All non-corporate taxpayers
• Taxpayers who have claimed the deduction under:
- Deductions in respect of certain incomes – The deductions under Section 80H to 80RRB are only for the profits and gains of specific industries. Like hotel business, small-scale industrial undertaking, housing projects, export business, infrastructure development, etc. But, It does not include Co-operative societies (they get deduction under Section 80P.
- Deduction under Section 35AD – the capital expenditure in assets qualify for depreciation year on year. But under this section, you can deduct 100% on capital expenditure spent on the specified business. It includes activities like the operation of cold chain facility, fertilizer production, etc.; or
- Profit linked deduction under Section 10AA – Deduction of profit varying from 100% to 50% is provided to units in Special Economic Zones (SEZs).
In Saral Income Tax, AMT computation is available for ITR3, ITR5, and ITR7.
AMT computation is applicable based on certain conditions. The AMT is an auto computed screen and the data from the applicable screen.
To view AMT computation, go to AMT–115JC in Tax Meter.
In this window, you can see the computation of Alternate Minimum Tax. If the provision is applicable and the relevant values are present. In other words, Deduction claimed under any section included in Chapter VI-A under the heading “C.-Deduction in respect of certain incomes” and Deduction claimed u/s 10AA.
You can manually enter the value for Deduction u/s 35AD Less Deprecation u/s 32 through the “…” button given.
On the computation of Adjusted Total Income, u/s 115JCit will also compute the applicable tax. It is 18.5% of the Adjusted Income.
Surcharge and HE Cess get applied to the AMT computed. The Tax Meter will then display the calculated tax.
If the credit of the previous year Alternate Minimum Tax is available, then you can pay the amount with that credit. You can see this change in the computation under AMT – Cr. 115JD in Tax Meter.
In this screen, it will then automatically take the present Assessment Year AMT computation. If the previous Assessment Year computation is available in the same file, it will be shown for the applicable Assessment Year.
If the data load of earlier AY is wrong, click on Clear earlier data. It will clear all the details. Then click on Load earlier data to reload the information.
So, depending on the criteria set in the IT Act it will automatically do the tax setoff.
On saving this information, the Tax Meter will then display the actual tax payable.
This completes the process of Alternate Minimum Tax ( AMT) and AMT credit taking in Saral Income Tax.