Section 115JD — Case Laws & Commentary

CHAPTER XII-BA — SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS OTHER THAN A COMPANY (ALTERNATE MINIMUM TAX)

SECTION 115JD — TAX CREDIT FOR ALTERNATE MINIMUM TAX

Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · Live Provision — the AMT credit mechanism

Status: LIVE. Section 115JD provides a credit for the AMT paid under section 115JC, so that AMT operates, in effect, as a timing difference rather than a final additional tax. The section was inserted by the Finance Act, 2011 (with Chapter XII-BA) with effect from 1 April 2012. The carry-forward period was enlarged from ten to fifteen assessment years by the Finance Act, 2017, with effect from assessment year 2018-19.

New-regime carve-out: Sub-section (7) — substituted by the Finance Act, 2023 (Act No. 8 of 2023), with effect from 1 April 2024 — provides that section 115JD does not apply to a person who has exercised the option under section 115BAC(5)/115BAD(5)/115BAE(5), or whose income is computed under section 115BAC(1A). A person who moves permanently into the new/concessional regime can therefore lose the benefit of an accumulated AMT credit.

Finance Act, 2026 impact: None. The Finance Act, 2026 does not amend section 115JD. The section stands for AY 2026-27 as amended up to the Finance Act, 2025.

A. SECTION COMMENTARY

A.1 Purpose and place in the scheme

Section 115JD converts AMT from a final levy into a credit that can be recouped in later years. When a non-corporate assessee pays AMT under section 115JC, the excess of the AMT over the regular income-tax of that year is allowed as a tax credit. In a subsequent year in which the regular income-tax exceeds the AMT, the credit is set off to the extent of that excess; the balance, if any, is carried forward. The mechanism mirrors the MAT credit under section 115JAA, and its policy is identical: the assessee bears the minimum levy in a low-tax year but is not doubly taxed, because the minimum tax already paid is given back against the higher regular tax of a future year.

A.2 How the credit works — the operative scheme (editorial summary)

This is an editorial summary; the verbatim text appears in Part B. Sub-section (1) allows the credit. Sub-section (2) quantifies it as the excess of AMT paid over the regular income-tax of that year; its proviso addresses the interaction with foreign tax credit — where the credit for foreign tax (under section 90, 90A or 91) allowed against AMT exceeds the foreign tax credit admissible against the regular income-tax, that excess is ignored in computing the AMT credit (so that a double benefit is not built into the carried-forward credit). Sub-section (3) provides that no interest is payable on the credit. Sub-section (4) sets the outer limit of carry-forward at the fifteenth assessment year succeeding the year in which the credit became allowable. Sub-section (5) governs the year and extent of set-off (regular income-tax must exceed AMT, and set-off is limited to that excess). Sub-section (6) requires the credit to be varied if the regular income-tax or AMT is later altered by any order under the Act. Sub-section (7) is the new-regime exclusion.

A.3 Core doctrinal themes

Theme (1) — The credit accrues by operation of law in the year AMT is paid, and is available for set-off in a later year on the statutory conditions; it is not contingent on a fresh claim each year. Theme (2) — Read with section 115JE, the AMT credit, like the MAT credit, must be taken into account in determining the tax liability and therefore ranks ahead of the interest computation. Theme (3) — The credit carries no interest (sub-section (3)) and lapses if not absorbed within fifteen assessment years, or on a permanent move into a regime to which section 115JD does not apply (sub-section (7)).

B. STATUTORY POSITION (verbatim)

Reproduced verbatim from the Income-tax Act, 1961 (Bare Act, as amended by the Finance Act, 2025; unchanged by the Finance Act, 2026):

Tax credit for alternate minimum tax.

115JD. (1) The credit for tax paid by 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: 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 the 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.

(7) The provisions of this section shall not apply to a person, where— (i) such person has exercised the option referred to in sub-section (5) of section 115BAC or sub-section (5) of section 115BAD or sub-section (5) of section 115BAE; or (ii) income-tax payable in respect of the total income of such person is computed under sub-section (1A) of section 115BAC. [Sub-section (7) substituted by Act No. 8 of 2023, w.e.f. 1-4-2024.]

C. CASE LAW — CLUSTERED BY ISSUE

Cluster C-1 : Priority of minimum-tax credit over interest — the order of set-off (cognate MAT authority applied through section 115JE)

Candour: there is, as at the date of writing, no reported decision turning on section 115JD itself — the AMT credit mechanism is mechanical and has not generated litigation of its own. The governing principle is supplied by the Supreme Court’s MAT-credit jurisprudence under the parallel section 115JAA, which applies to AMT through section 115JE (which makes all other provisions of the Act apply to a person under this Chapter) and by close analogy, because section 115JD is drafted as the non-corporate counterpart of section 115JAA.

Commissioner of Income-tax v. Tulsyan NEC Ltd. (2011) 330 ITR 226 (SC).

Facts: A company had paid minimum tax in an earlier year and was entitled to a tax credit under section 115JAA. In a later year the question arose whether that credit had to be set off against the assessed tax before charging interest under sections 234A, 234B and 234C.

Held: The Supreme Court held that the minimum-tax credit under section 115JAA must be taken into account in determining the tax liability, and the assessee is entitled to set off the credit before the interest computation; the right to the credit arises in the year the minimum tax is paid and is available for set-off in the manner provided by the section.

Ratio / why it matters: Minimum-tax credit ranks ahead of the interest computation: it reduces the tax on which the advance-tax shortfall (and hence interest) is worked out. Applied to AMT through section 115JE, the same ordering governs the AMT credit under section 115JD — credit first, interest thereafter.

Relevance to this section: The closest binding authority on how a statutory minimum-tax credit interacts with the interest provisions. It is presented here as MAT (company) authority applied by analogy and through section 115JE; it is NOT an AMT decision, and is flagged as such.

Source: Supreme Court of India · (2011) 330 ITR 226 · a MAT (section 115JAA) decision; applied to section 115JD by analogy. Verified via the standard ITR report and contemporaneous commentary.

Cluster C-2 : The foreign-tax-credit proviso

The proviso to sub-section (2) is a deliberate guard against an unintended double benefit: foreign tax credit (sections 90/90A/91) that is allowed against the AMT but exceeds what would be admissible against the regular income-tax must be ignored when quantifying the AMT credit to be carried forward. There is no reported judicial controversy on the proviso; it is applied on its plain terms. The practitioner point is that the carried-forward AMT credit must be computed after stripping out that excess foreign-tax element, failing which the credit will be overstated.

D. PRACTITIONER NOTES

(1) Quantify and carry the AMT credit every year AMT is paid — the credit accrues by operation of law, but it must be tracked and reflected in the return. (2) Watch the fifteen-year outer limit in sub-section (4); an unutilised credit lapses thereafter. (3) Insist on set-off of the credit before the interest computation (the Tulsyan NEC principle, applied through section 115JE). (4) Compute the credit net of the excess foreign-tax element under the proviso to sub-section (2). (5) Mind the new-regime trap: under sub-section (7) the credit cannot be set off in a year in which the person is taxed under section 115BAC(1A) or has opted into section 115BAC(5)/115BAD(5)/115BAE(5); a permanent migration into such a regime can extinguish an accumulated AMT credit, which should be factored into the decision to opt. (6) No interest accrues to the assessee on the credit (sub-section (3)).