ss.115JC to 115JF — Alternate minimum tax on a firm or LLP
The charge on a firm, limited liability partnership or other non-corporate assessee that has claimed a profit-linked deduction, at a higher rate than the company charge and with no threshold for a firm.
The counterpart in the Income-tax Act, 2025 is section 206(2), which compresses the whole of Chapter XII-BA into one sub-section. The rates, the twenty lakh rupee threshold and the fifteen year credit are unchanged, and, unlike the minimum alternate tax credit for companies, the alternate minimum tax credit in section 206(2)(e) to (i) was not omitted by Act No. 4 of 2026. So from tax year 2026-27 a non-corporate assessee still earns and carries a credit while a company does not.
Income-tax Act, 1961
ss.115JC to 115JF
Income-tax Act, 2025
s.206(2)
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 115JC of the Income-tax Act, 1961 provides that where the regular income-tax payable for a previous year by a person other than a company is less than the alternate minimum tax payable for that year, the adjusted total income is deemed to be the total income and tax is payable on it at eighteen and one-half per cent. Sub-section (2) defines adjusted total income as the total income before giving effect to Chapter XII-BA, increased by the deductions claimed under any section other than section 80P in Part C of Chapter VI-A, by the deduction under section 10AA, and by the deduction under section 35AD net of notional depreciation. Sub-section (4) gives nine per cent for a unit in an International Financial Services Centre and fifteen per cent for a co-operative society. Sub-section (3) requires an accountant's report before the specified date referred to in section 44AB, which rule 40BA prescribes as Form No. 29C. Section 115JD gives the credit, carried forward to the fifteenth assessment year succeeding the year it becomes allowable. Section 115JEE applies the Chapter to a person claiming such a deduction, and excludes an individual, a Hindu undivided family, an association of persons, a body of individuals and an artificial juridical person whose adjusted total income does not exceed twenty lakh rupees; a firm and a limited liability partnership are not in that list. Section 115JF carries the definitions.
What the provision does
Charges a non-corporate assessee that has claimed a Part C deduction, section 10AA or section 35AD, on its taxable income with those deductions added back, at a rate higher than the company charge. It catches the deduction by express addition rather than by omission, requires an accountant's report, and gives a credit on the same fifteen year footing as the company credit.
Threshold questions
- Is the assessee a person other than a company, because a company is charged under section 115JB instead
- Has a deduction been claimed under a Part C section other than section 80P, or under section 10AA or section 35AD, which is what section 115JEE(1) applies the Chapter on
- Is the assessee within the twenty lakh rupee threshold in section 115JEE(2), which a firm and a limited liability partnership never are because the sub-section does not mention them
- Which rate applies: eighteen and one-half per cent, fifteen per cent for a co-operative society, or nine per cent for an International Financial Services Centre unit
- Has the accountant's report in Form No. 29C been furnished by the specified date referred to in section 44AB
- Has an option under section 115BAC, 115BAD or 115BAE been exercised, which disapplies the Chapter, and note that none of those is available to a firm or a limited liability partnership
In practice
The recurring disputes.
Why a non-corporate developer is treated worse
On the same project and the same profit, a company pays fifteen per cent of book profit and a firm or limited liability partnership pays eighteen and one-half per cent of adjusted total income. The bases are different in kind as well: book profit is an accounting figure with statutory adjustments, adjusted total income is taxable income with the deductions added back. There is no threshold for a firm, and no concessional rate option that switches the charge off, because sections 115BAC, 115BAD and 115BAE are not open to a firm. The comparison is rarely made in the choice-of-vehicle advice that circulates in the real estate industry, which concentrates on dividend taxation, and it can be the larger number.
Whether the credit is usable, and the single project problem
Section 115JD(5) allows the set-off only in a year in which regular income-tax exceeds alternate minimum tax, and only to the extent of that excess. A firm constituted for one project generates credit through the construction and sale years and has no later year in which to use it, so the charge becomes a final tax in substance even though the statute calls it a credit. The answers are the same as for a company and carry the same difficulty: do not use a single project vehicle, or bring the project into an entity with other taxable business. Sub-section (6) varies the credit as appellate and rectification orders vary the tax, so an order allowing a section 80-IBA deduction that had been disallowed increases the credit for the year the minimum tax was paid.
The asymmetry the 2025 Act introduced
Section 206(2)(e) to (i) of the Income-tax Act, 2025 reproduce section 115JD, including the fifteenth tax year carry forward, and were not omitted by Act No. 4 of 2026. The corresponding company clauses, section 206(1)(m) to (p), were omitted with effect from 1 April 2026. So from tax year 2026-27 a firm or limited liability partnership pays the higher rate but keeps a recoverable credit, while a company pays the lower rate as a final charge. For a developer with a pipeline of projects, some eligible and some not, that may make the non-corporate vehicle the better one for the first time, and it is a reading of the text rather than a settled position: the Department's two sets of frequently asked questions on the transition could not be retrieved for this page.
Form 29C and what the annexure leaves out
Rule 40BA prescribes Form No. 29C, in which the accountant certifies that the adjusted total income and the alternate minimum tax have been computed in accordance with Chapter XII-BA. Annexure A has rows for the Chapter VI-A deduction and the section 10AA deduction and computes adjusted total income as the sum of items 5, 7 and 8, with no row for a section 35AD deduction although section 115JC(2)(iii) requires one to be added back; and it prints 18.5 per cent. These are form drafting lags rather than law, but a computation that follows the form rather than the section will be wrong where section 35AD is in play.