Section 115JD: Alternate Minimum Tax Credit, Calculation and Carry Forward
Section 115JD of the Income-tax Act, 1961 provided credit when an eligible non-company taxpayer paid Alternate Minimum Tax (AMT) above the regular income-tax liability. This guide explains how the credit is calculated, used and carried forward, including its treatment under the Income-tax Act, 2025.
What is AMT credit under Section 115JD?
Alternate Minimum Tax is an alternative income-tax computation for certain taxpayers other than companies, under Section 115JC of the 1961 Act. Regular income-tax is tax calculated under the ordinary provisions rather than the AMT mechanism. AMT credit is the amount by which AMT actually paid exceeds regular income-tax for the same assessment year, subject to the statutory adjustment for excess foreign tax credit.
The purpose is to avoid permanently losing the benefit of ordinary tax computation where the taxpayer pays a higher alternative tax in one year but incurs higher regular tax in a later year.
Section 115JD: Important provisions explained
| Provision | Rule under the 1961 Act |
|---|---|
| 115JD(1) | Allows credit for tax paid under Section 115JC. |
| 115JD(2) | Credit equals AMT paid minus regular income-tax payable; excess foreign tax credit, where applicable, is ignored in the statutory calculation. |
| 115JD(3) | No interest is payable on AMT credit. |
| 115JD(4) | Unused credit may be carried forward for up to fifteen immediately succeeding assessment years. |
| 115JD(5) | Set-off is permitted when regular tax exceeds AMT, limited to that excess; remaining eligible credit carries forward. |
| 115JD(6) | Credit must be revised if an assessment or other order changes the underlying tax liability. |
For later years, applicability is also affected by Section 115JD(7), including restrictions linked to certain concessional tax regimes. The original uploaded webpage predates this additional subsection; consult the official consolidated text before claiming credit.
Illustration: How AMT credit is calculated and used
Suppose an eligible taxpayer has regular income-tax of Rs. 2,40,000 and AMT of Rs. 3,10,000 in Year 1, before any relevant foreign tax credit adjustments.
| Particulars | Year 1 | Year 2 |
|---|---|---|
| Regular income-tax | Rs. 2,40,000 | Rs. 4,20,000 |
| AMT | Rs. 3,10,000 | Rs. 3,70,000 |
| New AMT credit | Rs. 70,000 | Nil |
| Maximum old credit usable | Nil | Rs. 50,000 |
| Remaining credit carried forward | Rs. 70,000 | Rs. 20,000 |
In Year 2, regular tax exceeds AMT by Rs. 50,000. Only Rs. 50,000 of the Year 1 credit can be set off; the remaining Rs. 20,000 may be carried forward within the original statutory time limit. This is an illustration, not a calculation of surcharge, cess or other adjustments.
AMT credit under the Income-tax Act, 2025
Section 206(2)(e) allows credit equal to the excess of AMT over regular income-tax. Section 206(2)(f) disallows interest on the credit and deals with excess foreign tax credit. Section 206(2)(g) governs set-off and the fifteen-succeeding-tax-year limit. Section 206(2)(h) adjusts the credit following a change in tax liability, while clause (i) addresses the operation of the credit provisions.
Under Section 536(2)(l), eligible unused Section 115JD credit from the repealed Act is recognised under the new Act, subject to the conditions and the remaining time for which it would have been allowed. The change in legislation does not restart a fresh fifteen-year period.
For the applicable statutory text, see the official Income-tax Act, 2025 as amended by the Finance Act, 2026 (PDF), especially Sections 206 and 536.
Who can claim AMT credit?
AMT primarily concerns qualifying non-company taxpayers, subject to the relevant deductions, exclusions and chosen tax regime. For the 2025 Act, Section 206(2) sets out the relevant definitions, adjustments, exemptions and reporting obligations. Notably, the AMT regime generally does not apply to individuals and certain other specified persons with adjusted total income not exceeding Rs. 20 lakh, and exclusions apply to certain optional or default tax regimes. The credit rules must be read with those eligibility rules.
Keep a year-wise record of the AMT paid, regular tax, credit generated, credit utilised, credit expired and credit remaining. For earlier years, the return schedules and assessment orders should be reconciled with the available credit.
AMT credit compared with MAT credit
AMT credit under Section 115JD relates to certain non-company taxpayers; MAT credit under Section 115JAA relates to companies. The rules are related but not interchangeable.
Frequently asked questions
What is AMT credit under Section 115JD?
It is the excess of alternate minimum tax paid over regular income-tax for the relevant assessment year, subject to the statutory foreign tax credit adjustment.
For how long can AMT credit be carried forward?
The credit can be carried forward for up to fifteen assessment years immediately following the year in which it first became allowable. The corresponding 2025 Act rule uses fifteen succeeding tax years.
Can AMT credit be used when regular tax is lower than AMT?
No. Set-off is available only when regular income-tax exceeds alternate minimum tax, and only up to that difference.
Does unused credit under the 1961 Act survive after 1 April 2026?
Eligible unutilised credit is preserved under the transition provisions of the Income-tax Act, 2025, subject to the remaining period and applicable conditions.
Section 115JD: Original statutory text and amendment notes
The following reference reproduces the material supplied in the previous webpage, including its historical amendment notes. It should be read alongside subsequent amendments and the new Act where applicable.
Read original Section 115JD text and amendment history
(1) The credit for tax paid by 1 a person under section 115JC shall be allowed to him in accordance with the provisions of this section.
(2) The tax credit of an assessment year to be allowed under sub-section (1) shall be the excess of alternate minimum tax paid over the regular income-tax payable of that year.
2 Provided that where the amount of tax credit in respect of any income-tax paid in any country or specified territory outside India under section 90 or section 90A or section 91, allowed against the alternate minimum tax payable, exceeds the amount of the tax credit admissible against the regular income-tax payable by the assessee, then, while computing the amount of credit under this sub-section, such excess amount shall be ignored.
(3) No interest shall be payable on tax credit allowed under sub-section (1).
(4) The amount of tax credit determined under sub-section (2) shall be carried forward and set off in accordance with the provisions of sub-sections (5) and (6) but such carry forward shall not be allowed beyond the3 fifteenth assessment year immediately succeeding the assessment year for which tax credit becomes allowable under sub-section (1).
(5) In any assessment year in which the regular income-tax exceeds the alternate minimum tax, the tax credit shall be allowed to be set off to the extent of the excess of regular income-tax over the alternate minimum tax and the balance of the tax credit, if any, shall be carried forward.
(6) If the amount of regular income-tax or the alternate minimum tax is reduced or increased as a result of any order passed under this Act, the amount of tax credit allowed under this section shall also be varied accordingly.
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1. Subs. by Act 23 of 2012, s. 51, for "a limited liability partnership under
section 115JC shall be allowed to it" (w.e.f. 1-4-2013).
2. Ins. by Act 7 of 2017, s. 48 (w.e.f. 1-4-2018).
3. Subs. by Act 7 of 2017, s. 48, for "tenth assessment year" (w.e.f. 1-4-2018).
Official legislative sources and guidance
- Income Tax Department: Section 115JD, Income-tax Act, 1961
- Income-tax Act, 2025 as amended by Finance Act, 2026 (official PDF)
- Income Tax Department: transition FAQs on MAT and AMT credits
- Income Tax Department: tax rates and computation
Information is for general legal and tax education. Applicable provisions depend on the tax year, taxpayer status and available elections.