Income Tax Bill 2025: Wider AMT Reach for LLPs and Firms
Why in the news
Provisions of the new Income Tax Bill could extend minimum-tax rules to more LLPs and partnership firms and sharply raise tax on long-term capital gains.
Current law vs proposed
| Aspect | IT Act, 1961 | IT Bill, 2025 |
|---|---|---|
| LTCG in AMT | 12.5% concessional | Concession removed; likely 18.5% |
| Who is covered | Only those claiming Chapter VIA deductions | Likely every LLP and partnership |
| Section | Separate rules with carve-outs such as 115JEE | Single Section 206 |
Key points
- Section 206 merges AMT and MAT: AMT applies when an LLP’s tax on adjusted income is under 18.5%.
- Entities with pure capital gains could now be caught.
Implications
- Investment-focused LLPs holding long-term assets may face a steep tax hike; industry seeks clarification.
- CBDT invited suggestions, to be passed to the Select Committee.
Exam angle
- Related terms: LLP, LTCG, Chapter VIA, MAT.