18.5% minimum on adjusted total income > ₹20L. Triggered by Section 10AA SEZ + 80-IAC + similar deductions. AMT credit carry-forward 15 years. Major for SEZ + startups.
AMT = Alternative Minimum Tax. Section 115JC. ENSURES taxpayers with LARGE DEDUCTIONS pay minimum tax. APPLIES TO: (1) INDIVIDUALS, HUF, AOP, BOI. (2) NOT companies (115JB Minimum Alternative Tax MAT for companies separate). (3) ADJUSTED total income > ₹20L. (4) ELIGIBLE FOR specific deductions (80H to 80RRB, Section 10AA SEZ). MINIMUM TAX RATE: 18.5% of adjusted total income + surcharge + cess. (5) Higher of normal tax OR AMT applies.
AMT CALCULATION: STEP 1: Calculate NORMAL TAX (slab rate or new regime). STEP 2: Calculate ADJUSTED TOTAL INCOME (ATI): Add back specific deductions to taxable income. (a) Section 10AA SEZ profits. (b) 80H-80RRB profits/donations. (c) Specific deductions claimed. STEP 3: Calculate AMT = 18.5% × ATI. STEP 4: ACTUAL TAX = MAX(Normal Tax, AMT). EXAMPLE: ₹40L ATI with ₹30L 10AA SEZ deduction. (a) Normal tax: ₹10L taxable, slab tax ~₹50K. (b) AMT: ₹40L × 18.5% = ₹7.4L. (c) ACTUAL TAX = ₹7.4L. AMT triggered.
AMT NOT APPLICABLE: (1) NORMAL SALARIED EMPLOYEES (no Section 10AA SEZ). (2) Adjusted Total Income ≤ ₹20L. (3) Individuals without Section 10AA/80H-80RRB claims. (4) Old regime salaried with standard 80C/80D/HRA deductions. APPLIES MAINLY TO: (1) SEZ unit employees + entrepreneurs (Section 10AA). (2) Startups claiming 80-IAC. (3) Co-operatives. (4) HUF with eligible deductions. (5) NRIs with specific deduction usage. STRATEGIC: Most salaried Indians NOT impacted. SEZ + startup founders should plan for AMT.
AMT CREDIT: Tax paid as AMT over normal tax can be CARRIED FORWARD as credit. (1) AVAILABLE for 15 YEARS. (2) USED when future year's NORMAL TAX > AMT. (3) REDUCES future tax burden. EXAMPLE: FY 2026-27 AMT ₹7.4L paid, Normal tax ₹2L. AMT CREDIT = ₹5.4L. Future FY 2028-29: Normal tax ₹6L, AMT ₹4L. APPLY ₹2L CREDIT (reduce normal to AMT level). REMAINING CREDIT: ₹3.4L for future years. STRATEGIC: track AMT credit balance + claim in profitable years. CONSULT CA for AMT credit utilization planning.
AMT STRATEGY: (1) SEZ EMPLOYEES + STARTUPS: model AMT impact before claiming Section 10AA/80-IAC. (2) AMT TRIGGER threshold ATI > ₹20L. (3) 80-IAC TAX HOLIDAY startups: AMT may eat into benefit during holiday years. (4) AMT CREDIT tracked across years. (5) NEW REGIME (115BAC): NO Section 10AA claimed → typically NO AMT. (6) OLD REGIME WITH 10AA: AMT likely applies. (7) PROFITABILITY years post-holiday: utilize AMT credit. (8) DOCUMENT all AMT credit calculations annually. (9) Form 29C accompanies ITR for AMT computation. (10) ENGAGE CA for SEZ/startup AMT planning — complex. Many startups overlook AMT impact on tax holidays.