{"id":7851,"date":"2025-07-15T12:18:55","date_gmt":"2025-07-15T12:18:55","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7851"},"modified":"2025-07-15T12:18:56","modified_gmt":"2025-07-15T12:18:56","slug":"alternative-minimum-tax-amt","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/alternative-minimum-tax-amt\/","title":{"rendered":"Alternative Minimum Tax (AMT)"},"content":{"rendered":"<p><strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/alternative-minimum-tax-amt\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Alternative Minimum Tax (AMT)<\/a><\/strong> is like a backup <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a> system. It ensures that even people or companies who use too many tax breaks still pay a <strong>minimum amount of tax<\/strong>.<\/p>\n\n\n\n<h2 id=\"why-amt-exists\" class=\"wp-block-heading\">Why AMT Exists<\/h2>\n\n\n\n<p>Some taxpayers reduce their regular tax so much using deductions and exemptions that they pay very little tax&#x2014;or none at all. AMT makes sure they still pay a <strong>basic minimum tax<\/strong>, even after using those breaks.<\/p>\n\n\n\n<h2 id=\"who-has-to-pay-amt\" class=\"wp-block-heading\">Who Has to Pay AMT?<\/h2>\n\n\n\n<h3 id=\"individuals-including-hufs-aops-bois\" class=\"wp-block-heading\">Individuals (including HUFs, AOPs, BOIs):<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>AMT applies <strong>only if<\/strong>:\n<ul class=\"wp-block-list\">\n<li>Your <strong>adjusted total income<\/strong> is more than &#x20B9;20 lakh, <strong>and<\/strong><\/li>\n\n\n\n<li>You claim <strong>certain deductions<\/strong> like:\n<ul class=\"wp-block-list\">\n<li>10AA (SEZ units)<\/li>\n\n\n\n<li>35AD (specified business deductions)<\/li>\n\n\n\n<li>80-IA to 80RRB (except 80P)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 id=\"companies\" class=\"wp-block-heading\">Companies:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>AMT used to apply to companies not paying Minimum Alternate Tax (MAT).<\/li>\n\n\n\n<li>But now, <strong>MAT and AMT rules are mostly separated<\/strong>&#x2014;AMT applies more to <strong>non-<a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/corporate-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">corporate tax<\/a>payers<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"formula-to-calculate-amt\" class=\"wp-block-heading\">Formula to Calculate AMT<\/h2>\n\n\n\n<p>AMT=18.5%&#xA0;of&#xA0;Adjusted&#xA0;Total&#xA0;Income<\/p>\n\n\n\n<p><strong>Adjusted Total Income<\/strong> means:<br>= Total income + deductions claimed under sections like 10AA, 35AD, etc.<\/p>\n\n\n\n<p>If AMT is <strong>more than your regular tax<\/strong>, then you <strong>must pay AMT instead<\/strong>.<\/p>\n\n\n\n<h2 id=\"example\" class=\"wp-block-heading\">Example<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your regular <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">income tax<\/a>: &#x20B9;2 lakh<\/li>\n\n\n\n<li>But your <strong>adjusted income<\/strong> (after adding back 35AD deductions) is &#x20B9;25 lakh<\/li>\n\n\n\n<li>AMT = 18.5% of &#x20B9;25 lakh = &#x20B9;4.625 lakh<\/li>\n<\/ul>\n\n\n\n<p>Since &#8377;4.625 lakh &gt; &#8377;2 lakh, you must pay &#8377;4.625 lakh as AMT.<\/p>\n\n\n\n<h2 id=\"amt-credit\" class=\"wp-block-heading\">AMT Credit<\/h2>\n\n\n\n<p>If you paid AMT this year (more than regular tax), the extra amount becomes a <strong>tax credit<\/strong>.<br>You can <strong>adjust it in future years<\/strong> when your regular tax is higher.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>AMT Credit is valid for <strong>15 years<\/strong><\/li>\n\n\n\n<li>You can use it <strong>only when regular tax &gt; AMT<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 id=\"key-points-summary\" class=\"wp-block-heading\">Key Points Summary<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Feature<\/th><th>Details<\/th><\/tr><\/thead><tbody><tr><td>Applies To<\/td><td>Individuals, HUFs, AOPs, BOIs (not firms)<\/td><\/tr><tr><td>Income Threshold<\/td><td>&#x20B9;20 lakh or more<\/td><\/tr><tr><td>Tax Rate<\/td><td>18.5% + surcharge + cess<\/td><\/tr><tr><td>Trigger Conditions<\/td><td>Use of specific deductions like 10AA, 35AD<\/td><\/tr><tr><td>Credit Available?<\/td><td>Yes &#x2013; AMT Credit for 15 years<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 id=\"exceptions\" class=\"wp-block-heading\">Exceptions<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If you <strong>don&#x2019;t claim<\/strong> any of the special deductions, <strong>AMT won&#x2019;t apply<\/strong>&#x2014;no matter how high your income is.<\/li>\n\n\n\n<li><strong>Companies under MAT<\/strong> don&#x2019;t worry about AMT.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Alternative Minimum Tax (AMT) is like a backup tax system. It ensures that even people or companies who use too many tax breaks still pay a minimum amount of tax. Why AMT Exists Some taxpayers reduce their regular tax so much using deductions and exemptions that they pay very little tax&#x2014;or none at all. AMT [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7851","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7851\/revisions"}],"predecessor-version":[{"id":7852,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7851\/revisions\/7852"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}