LLP Destination
Alternate Minimum Tax (AMT) on LLPs Back
The Finance Act, 2011 seeks to tax certain LLPs differently. A new Chapter XII-BA titled "Special Provisions relating to certain Limited Liability Partnerships" has been introduced w.e.f. April 01, 2012. Under this Chapter, LLPs are now subject to Alternate Minimum Tax ("AMT") @18.5%, in line with Minimum Alternate Tax ("MAT") in case of companies. However the applicability of AMT to LLPs is quite restricted compared to MAT in case of companies. This is by view of the fact that the tax base in case of LLPs would be the Adjusted Total Income computed under Section 115JC(2) and not Book Profit as in case of Companies.

Adjusted Total income is the Total Income as increased by -

Therefore, unlike company, LLP would not be liable to pay AMT on exempt incomes like Long term capital gain under section 10(38), Dividend income under section 10(34), etc.

Comparison between MAT and AMT


MAT AMT
Applicability MAT is applicable to companies AMT is applicable to LLPs
Chapter and Section of Taxability Chapter XII-B, Section 115JB Chapter XII-BA, Section 115JC
Tax Base Taxable on Book Profits Taxable on Adjusted Total Income
Meaning of Tax Base Book Profit means the Net Profit as shown in the Profit & Loss Account as increased/decreased by certain items specified under Explanation to Section 115JB Adjusted Total income means the total income computed under normal provisions of the Income Tax Act as increased by the deductions claimed, if any, under Chapter VI-A (C) or Section 10AA
Trigger Point Companies are required to pay MAT on book profits if the income tax payable on the total income, computed under the Income Tax Act, is less than MAT Where the regular income tax payable for a previous year by a LLP is less than AMT payable for such previous year, Adjusted Total Income shall be deemed to be the total income of the LLP for such previous year and LLP will be liable to pay income-tax on such adjusted total income
Rate of Tax MAT rate - 18% + surcharge @ 5% if book profit exceeds Rs. 1 crore + Education Cess @ 3% Effective Rate (including surcharge) - 19.5% AMT rate - 18.5% + Education Cess @3% Effective rate - 19.05% (Surcharge is not applicable to LLPs)
Tax Credit MAT paying companies can claim the credit for 10 assessment years starting from the year in which the credit becomes allowable AMT paying LLPs can claim credit for 10 assessment years starting from the year in which the credit becomes allowable
Exempt Income Companies are liable to pay MAT on income exempt under Section 10 (38) and 10 (34) LLPs are not liable to pay AMT on incomes exempt from tax
View AMT Provisions under Chapter XII - BA