Whether inclusion of LTCG taxed at 12.5% in adjusted total income under Section 115JC (AMT) nullifies the benefit of concessional capital gains rate

[Fahiyaz Ahmmed]

Under the amended LTCG regime (Finance Act, 2024), an assessee may opt to pay 12.5% LTCG without indexation (or 20% with indexation for pre-23/07/2024 properties). However, the LTCG amount is still included in total income / adjusted total income for Section 115JC (AMT) purposes. Due to this inclusion, AMT at 18.5% may become payable, effectively nullifying the benefit of the 12.5% option. This results in an indirect higher tax burden on LTCG despite a special concessional rate being provided by law. Is there any Supreme Court or High Court ruling addressing this interaction between LTCG at special rates and AMT under Section 115JC? Have courts provided any remedy or exclusion to preserve the benefit of the concessional LTCG rate? If not, are there analogous MAT/AMT judgments on capital gains that can be relied upon?

AI Summary

Long-term capital gains included in adjusted income may trigger AMT, possibly negating concessional 12.5% rate. Inclusion of long term capital gains taxed at 12.5% in adjusted total income under Section 115JC can cause AMT at 18.5% to become payable, potentially negating the statutory concession of the lower LTCG rate. The issue asks whether courts have excluded such concessional gains from AMT computation, allowed credit mechanisms, or applied analogous MAT/AMT precedent to preserve the benefit of the concessional rate.