Hello! If you heard about Section 115JD of the Income Tax Act and got confused, relax, you are not alone. It is all about this so-called Alternate Minimum Tax (AMT) credit that can save you some cash in taxes if you understand it. In this post, I’ll explain it in really simple language, using the latest information for 2025, so you can get it without any tax speak headaches. Let’s get going!

What’s Section 115JD All About?

Suppose you are paying taxes, but due to some deductions (such as business expenses), your normal tax bill is really low. The government is like, “Wait a minute, you still owe us a minimum tax!” That’s where the Alternate Minimum Tax (AMT) comes in. It is sort of a backup tax to ensure individuals or businesses with a lot of deductions still pay something.

the best part Section 115JD is this allows you to take a tax credit on any additional AMT you have paid. The credit can decrease your tax burden in subsequent years when your normal tax is more than AMT. It is like a coupon you can use later!

Who Can Avail This Tax Credit?

This provision is for non-corporate taxpayers, such as:

• Individuals (you or me)
• Hindu Undivided Families (HUFs)
• Partnerships or firms
• Associations of Persons (AOPs)

But there are a twist, if you have opted for the new tax regime under sections 115BAC, 115BAD or 115BAE (simplified tax plans with lower deductions), you cannot claim this credit. So, it’s primarily for those who are going with the old tax system with deductions.

How Does the Tax Credit Work?

Let’s make it easy with a step-by-step look:

1. Pay AMT When Needed: If your ordinary income tax is lower than the AMT (determined at 18.5% of your adjusted income plus cess), you are required to pay the AMT instead. Your adjusted income is your overall income plus specific deductions you opted, such as those under sections 80H to 80RRB or 10AA.

1. Calculate the Credit: The tax credit is the AMT paid by your minus your regula  r tax. For instance, if your regular tax is ₹60,000 and AMT is ₹1,00,000, then your credit would be ₹1,00,000 – ₹60,000 = ₹40,000.
2. Use It Later: You can utilize this credit in any subsequent year when your normal tax is more than your AMT. Let’s say, next year your normal tax is ₹80,000 and AMT is ₹50,000. You can utilize up to ₹30,000 of your credit (₹80,000 – ₹50,000) to reduce your tax.
3. Carry It Forward: If you can’t use the entire credit, you can carry it forward for 15 years from the year you received it. That’s a long time to save taxes!
4. No Interest, No Fuss: The credit does not accrue interest and if your tax amounts change because of a reassessment, the credit changes too.

A Quick Example to Make It Clear

Suppose Priya, a businessperson, has this scenario in 2024-25:

• Her regular tax (after deductions) is ₹2,00,000.
• Her AMT is ₹2,50,000 (because her adjusted income is high).
• She pays ₹2,50,000 and gets a credit of ₹50,000 (₹2,50,000 – ₹2,00,000).

In 2025-26:

• Her regular tax is ₹3,00,000, and AMT is ₹2,60,000.
• She can use her ₹50,000 credit to reduce her tax to ₹2,50,000 (₹3,00,000 – ₹50,000).

If she only uses ₹30,000 of the credit, the remaining ₹20,000 carries forward for up to 15 years. Easy, right?

Things to Keep an Eye On

• Foreign Tax Credits: When you paid tax outside the country and availed of credits under sections 90, 90A, or 91, excess foreign credit cannot increase your AMT credit. It’s separated so you don’t get to double dip.
• Take a CA’s Assistance: If you come under AMT, you have to get certified by a Chartered Accountant your adjusted income and AMT in Form 29C. This keeps the whole thing in order.
• No Credit for New Regime: If you changed to the new tax regime (such as section 115BAC), then this credit doesn’t apply. Check your choice of tax double!

Why This Matters in 2025

With tax laws constantly evolving, being aware of Section 115JD in 2025 will assist you in planning better. If you have a business or are taking large deductions, AMT may come into play, but this credit is a cushion. It keeps you from paying too much in taxes in the long term, particularly if your income varies from year to year.

For instance, if you’re investing in properties or taking deductions for export enterprises (section 10AA), you may incur AMT now but save down the line with this credit. It is one excellent means of evening your tax burden over a duration.

Last Thoughts: Your Tax-Saving Buddy

Section 115JD is a pal who assists you in recovering money paid more than you owed in taxes. It is not that hard once you learn the tricks of the trade, just pay the AMT when you need to, claim your credit and apply it to reduce future taxes. Whether you’re self-employed, own a small business or work in a family business, this rule can make your life easier when it comes to taxes.

So, next time yous are chatting with your accountant, ask about AMT and Section 115JD. It could mean extra cash in your pocket down the road! Got questions about this? Drop them below, and let’s keep the tax talk simple and fun.