Section 80JJAA

Deduction in respect of employment of new employees

  1. Eligibility:
    • An Assessee to whom Tax Audit (section 44 AB) is applicable
    • Gross total income includes any Profits or Gains derived from Business
  2. Deduction allowed: 30% of additional employee cost in the previous Year.
  3. Period of Deduction: Three Assessment Years including Assessment Year in which employment is provided
  4. Assessee Not covered:
    • Companies formed by splitting up or reconstruction of existing business
    • Business acquired by way of Transfer from any other person or as a result of any business reorganization
  5. Additional Employee : It means an employee who has been employed during the previous year and whose employment has the effect of increasing the total number of employees employed by the employer as on the last day of the preceding year, but does not include:
    • An employee who total emoluments (salary) are more than Rs.25,000 per month.
    • An employee for whom the entire contribution is paid by the Government under the Employees Pension Scheme.
    • An employee who is employed for a period of less than 240 days during the previous years. In case of apparel manufacturers, the minimum employment period is 150 days.
    • Any employee who does not participate in the recognized provident fund.
  6. Additional Employee Cost: Additional employee costs means total emoluments (salary) paid or payable to additional employees employed during the previous year. Provided that in the case of an existing business, the additional employee cost shall be nil, if:
    • There is no increase in the number of employees from the total number of employees employed as on the last day of the preceding year.
    • Emoluments (salary) are paid otherwise than by an account payee cheque or account payee bank draft or by use of ECS through a bank account. Also, in the first year of business, emoluments (salary) paid or payable to the employees employed during that year will be deemed to be the additional employee cost.

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