Section 115JC of the Income Tax Act:Alternate Minimum Tax Explained (2026)
If you run an LLP, a partnership firm, or a business claiming deductions under Section 10AA or 80-IA, there is a provision that can quietly override your entire tax calculation. Section 115JC of the Income Tax Act is that provision. It says that no matter how many legitimate deductions you claim, you must still pay a minimum level of tax. This is the Alternate Minimum Tax, or AMT. It is the non-corporate cousin of MAT, and it catches people off guard because it does not appear anywhere in your normal computation. You claim your deductions, arrive at a comfortable tax figure, and then AMT recalculates everything on a different base. There is also something important that most articles on this topic have not caught up with. The Income Tax Act, 1961 was repealed on 1 April 2026. Section 115JC no longer applies to income earned from that date onwards. But it still governs FY 2025-26, the return most businesses are filing right now. This guide covers both: how 115JC works for the year you are filing, and what replaces it going forward.
Who Section 115JC Actually Applies To
Two-Condition Test
AMT under Section 115JEE does not apply to every non-corporate taxpayer. It only kicks in when a taxpayer passes through both filters simultaneously: having claimed a specific "triggering deduction" AND (for most taxpayers) crossing an income threshold.
Triggering Deductions
AMT applies only if you've claimed a deduction under Chapter VI-A Part C (Sections 80-IA to 80RRB, excluding 80P), Section 10AA (SEZ units), or Section 35AD (capital expenditure on specified businesses). No claim under these sections means no AMT exposure.
The Threshold Rule
Individuals, HUFs, AOPs, BOIs, and artificial juridical persons only face AMT if adjusted total income exceeds ₹20 lakh. LLPs and partnership firms get no such cushion if they've claimed a triggering deduction, AMT applies regardless of income size.
The 80C Myth, Debunked
A common misconception is that Section 80C, 80D, and similar deductions trigger AMT. They don't. These sit in Chapter VI-A Part B ("payments"), while AMT is only triggered by Part C ("certain incomes") deductions. PPF, ELSS, and insurance deductions are irrelevant to Section 115JC.
Who Falls Outside 115JC Entirely
Companies (governed by MAT under 115JB instead), anyone on the new tax regime (per Section 115JC(5), effective 1 April 2024, covering 115BAC(1A) and opt-ins under 115BAC(5)/115BAD(5)/115BAE(5)), presumptive taxpayers under 44AD/44ADA, and anyone not claiming Part C, 10AA, or 35AD deductions.
What is Section 115JC of the Income Tax Act?
How AMT is Calculated Under Section 115JC
Compute Your Total Income Normally
Work out total income the usual way, after claiming every deduction you are entitled to. This gives you your regular tax liability.
Build the Adjusted Total Income
Take total income and add back the triggering deductions:
Chapter VI-A Part C deductions claimed (other than 80P)
Section 10AA deduction claimed
Section 35AD deduction claimed, reduced by the depreciation that would have been allowable under Section 32 had 35AD not been claimed
The result is your Adjusted Total Income (ATI). Note the 35AD adjustment: you do not add back the gross amount, only the excess over normal depreciation.
Apply the AMT Rate
Multiply ATI by 18.5%, then add applicable surcharge and 4% health and education cess. The effective rate lands near 19.24%.
Compare and Pay the Higher
Compare regular tax with AMT. You pay whichever is higher. If AMT wins, your ATI is deemed to be your total income for the year.
Record Your AMT Credit
The excess (AMT paid minus regular tax) becomes AMT credit under Section 115JD. Carry it forward for up to 15 assessment years.
Get Form 29C Before Filing
Obtain a report from a Chartered Accountant in Form 29C (prescribed under Rule 40BA), certifying the ATI and AMT computation. Furnish it by the due date under Section 139(1).
Compute Your Total Income Normally
Work out total income the usual way, after claiming every deduction you are entitled to. This gives you your regular tax liability.
Build the Adjusted Total Income
Take total income and add back the triggering deductions:
Chapter VI-A Part C deductions claimed (other than 80P)
Section 10AA deduction claimed
Section 35AD deduction claimed, reduced by the depreciation that would have been allowable under Section 32 had 35AD not been claimed
The result is your Adjusted Total Income (ATI). Note the 35AD adjustment: you do not add back the gross amount, only the excess over normal depreciation.
Apply the AMT Rate
Multiply ATI by 18.5%, then add applicable surcharge and 4% health and education cess. The effective rate lands near 19.24%.
Compare and Pay the Higher
Compare regular tax with AMT. You pay whichever is higher. If AMT wins, your ATI is deemed to be your total income for the year.
Record Your AMT Credit
The excess (AMT paid minus regular tax) becomes AMT credit under Section 115JD. Carry it forward for up to 15 assessment years.
Get Form 29C Before Filing
Obtain a report from a Chartered Accountant in Form 29C (prescribed under Rule 40BA), certifying the ATI and AMT computation. Furnish it by the due date under Section 139(1).
Common Mistakes with Section 115JC
Assuming 80C and 80D Trigger AMT
They do not. Only Chapter VI-A Part C deductions, 10AA and 35AD do. This single misunderstanding causes needless panic and wasted computation.
Thinking the ₹20 Lakh Limit Protects Everyone
It does not protect LLPs and firms. That threshold under Section 115JEE covers only individuals, HUFs, AOPs, BOIs and artificial juridical persons. A small LLP claiming a 10AA deduction is squarely inside AMT.
Confusing AMT with MAT
MAT is for companies and runs on book profits. AMT is for non-corporates and runs on adjusted total income. They are separate provisions with separate forms and separate credit sections.
Forgetting Advance Tax on AMT
AMT liability counts for advance tax. Underestimating it attracts interest under Sections 234B and 234C. Project your AMT early in the year, not at filing time.
Skipping Form 29C
The CA report is mandatory, not optional. Missing it can jeopardise your AMT computation and your credit claim.
Letting AMT Credit Lapse
Fifteen years feels long until it isn't. Track the credit every year, and check the position before switching to the new regime, because the credit does not travel with you.
Forgetting the Add-Back Nuance on 35AD
You add back the 35AD deduction less the normal Section 32 depreciation you would otherwise have claimed. Adding back the gross figure overstates your ATI and your tax.
Who Should Read This
LLPs and Partnership Firms
Especially those claiming SEZ, infrastructure or specified-business deductions, where no income threshold protects you.
SEZ Unit Operators
Anyone claiming Section 10AA is a prime AMT candidate.
Businesses Claiming 35AD
Cold storage, warehousing, hospitals and other specified businesses with heavy capital expenditure.
Individuals on the Old Regime
Only if you claim Part C deductions and your ATI crosses ₹20 lakh. On the default new regime, AMT does not reach you.
Tax Advisors Handling FY 2025-26 Filings
The transition year needs both laws on your desk at once.
Worked Example: An LLP with an SEZ Unit
AMT vs MAT: Section 115JC vs Section 115JB
FAQs
Section 115JD: How AMT Credit Works
AMT is a prepayment, not a penalty, and Section 115JD is what makes that true.
Credit amount = AMT paid minus regular tax for that year
Carry forward = up to 15 assessment years
Set-off = only in a year where regular tax exceeds AMT, and only up to that difference
No interest is paid on the credit
Not refundable — it can only be adjusted against future tax
Lapses if unused after 15 years
One trap worth knowing: if you move to the new tax regime, you lose access to AMT credit. Section 115JD does not allow credit to taxpayers computing tax under 115BAC(1A). Before switching regimes, check whether you are sitting on unused credit.
Big Update: What Happens from 1 April 2026
This is the part that changes everything, and it is why you should not rely on older articles.
The Income Tax Act, 2025 received Presidential assent on 21 August 2025 and came into force on 1 April 2026. It repealed the Income Tax Act, 1961 entirely. The new Act has 536 sections across 23 chapters and 16 schedules, roughly 40% shorter than the old law.
Section 115JC is now Section 206. The AMT framework carries over into the new Act with the same core logic. Rates are unchanged; the reform is structural and linguistic, not substantive. Section numbering has shifted across the board (Section 80C is now Section 123, for example).
Which law applies to you right now
Period
Governing law
AMT provision
FY 2025-26 (AY 2026-27)
Income Tax Act, 1961
Section 115JC
Tax Year 2026-27 onwards
Income Tax Act, 2025
Section 206
So if you are filing for FY 2025-26 this year, Section 115JC still applies to you in full. The 1961 Act continues to govern every period up to 31 March 2026, and pending assessments and appeals for earlier years stay under the old law by virtue of the repeal-and-savings provision.
The LLP fix worth knowing
The original Income Tax Bill, 2025 had drafted AMT in a way that would have pulled in LLPs with no triggering deductions at all, including those with only long-term capital gains. That would have taxed such LLPs at 18.5% instead of the concessional 12.5% LTCG rate.
After the Select Committee review, this was corrected before enactment. The scope of AMT for LLPs was aligned back with the existing position, so LLPs not availing specific tax benefits are not pushed to 18.5% and can continue at the concessional rate. If you read commentary from early 2025 warning about this, it describes a draft that did not survive.
Another change: "Previous Year" and "Assessment Year" are replaced by a single "Tax Year." The Income Tax Department has published an official concordance table mapping old sections to new ones.
Conclusion
Section 115JC exists for one reason: to make sure that non-corporate taxpayers who claim heavy profit-linked incentives still contribute a minimum amount of tax. It is not a penalty, and the excess you pay returns to you as credit under Section 115JD.
The three things that matter most are these. AMT is triggered by Part C, 10AA and 35AD deductions only, not by your 80C investments. The ₹20 lakh threshold does not shield LLPs and firms. And if you are filing for FY 2025-26, Section 115JC still applies to you in full, even though the Income Tax Act, 2025 has already taken over for Tax Year 2026-27 onwards.
If your business claims an SEZ or infrastructure deduction, model your AMT liability before the advance tax dates rather than discovering it at filing. And if you are carrying AMT credit, check the position before you switch tax regimes, because the credit does not follow you.
StartupFlora provides consultancy services only. We are not affiliated with any government department. All scheme benefits and approvals are at the sole discretion of the respective government authority and implementing agency.