Understanding Minimum Tax

According to Section 12D, the minimum tax is applicable where a person’s instalment tax is lower than their minimum tax (1% of turnover) and is payable in four instalments payable by the 20th of the 4th, 6th, 9th and 12th month of a year of income and is a final tax. To make it easier to conceptualise this, it is necessary to understand the instalment tax regime.

Instalment tax is not an income tax on its own, it is a system of collecting the current year’s income tax in advance. In the case of a company, for instance, its corporation tax for the year 2021 is payable in four instalments in the course of the year 2021.