I-T Bill may lead to increased tax burden on LLPs

The Income-Tax (I-T) Bill, 2025, has broadened the scope of the alternative minimum tax (AMT) applicable to taxpayers other than companies, potentially increasing the tax burden on partnership firms and limited liability partnerships (LLPs) with long-term capital gains (LTCG).

- MONIKA YADAV

AMT ensures that such firms pay a minimum tax of 18.5 per cent. However, during the computation of AMT, LTCG is currently taxed at a preferential rate of 12.5 per cent. The new Bill seeks to remove this special treatment for LTCG, thereby increasing the overall tax burden.

The Bill, introduced in the Lok Sabha and currently under review by a Select Committee of Parliament, omits a provision from the I-T Act, 1961, which stipulated that the AMT rate of 18.5 per cent would apply only when deductions were claimed under Chapter VI-A of the I-T law. Experts say this omission will make AMT provisions applicable even to firms that do not claim deductions.

Some industry bodies have also made representations before the Select Committee on the matter, according to sources.