Section 115JC of ITA, 1961 : Section 115Jc: Special Provisions For Payment Of Tax By Certain Persons Other Than A Company

Explanation using Example

Imagine a freelance graphic designer, Mr. Sharma, who earns income from various projects throughout the year. In the financial year 2022-23, he makes a profit of INR 10 lakhs. He claims deductions under various sections, such as section 80C for his investments in tax-saving instruments and section 35AD for investment in a new plant and machinery. After these deductions, his taxable income reduces significantly, and his regular income-tax liability comes out to be INR 1 lakh.

However, under Section 115JC, the Income Tax Act requires the calculation of an alternate minimum tax (AMT). When Mr. Sharma calculates his adjusted total income by adding back the deductions under section 80C and section 35AD (minus depreciation), his adjusted total income is higher, and the AMT payable comes out to be INR 1.5 lakhs, which is more than his regular income-tax liability.

As per Section 115JC, Mr. Sharma must pay the higher AMT of INR 1.5 lakhs instead of the regular tax of INR 1 lakh. He is also required to obtain a report from an accountant certifying his adjusted total income and the AMT computed, and furnish this report by the due date for filing his income tax return.