ABC & Co., an AOP, has an annual turnover of Rs. 116 million and a computed tax liability under the normal tax regime (NTR) of Rs. 164,000 for tax year 2026. The minimum tax under section 113 (1.25% of turnover) calculates to Rs. 1,450,000. What is the tax payable by the AOP, and what is the treatment of the difference?

Correct answer: C) C) Tax payable is Rs. 1,450,000; the difference of Rs. 1,286,000 can be carried forward for adjustment against future tax liabilities for up to two tax years.

Explanation

The AOP must pay the higher of the minimum tax or the normal tax (Rs. 1,450,000). The excess of minimum tax paid over the actual normal tax payable (Rs. 1,286,000) shall be carried forward for adjustment against tax liability for the two immediately succeeding tax years.