Section 80JJAA of the Income Tax Act was created to encourage firms to hire new employees on a regular basis. Section 80JJAA deduction is for the recruitment of new or additional employees.
Section 80JJAA DEDUCTION:
30% of additional employee cost for three years.
ELIGIBILITY for Section 80JJAA Deduction:
Applicable to all Assessees having business income.
Conditions:
1. The business should not have been formed by splitting up or the reconstruction of an existing business. A business can be formed as a result of re-establishment, reconstruction or revival.
2. The taxpayer should not have acquired the business through a transfer from another person or through a business reorganisation.
3. The taxpayer must file an income tax return and a Chartered Accountant’s report in Form 10DA before the due date.
ADDITIONAL EMPLOYEE COST:
- For New business: All Employees.
- For Existing business: There should be increase in no of employees as compare to last year.
E.g. as on 31.03.2020 you have 100 employees but as on 31.03.2021 you have 90 employees so there is no increase in employee cost and deduction will be NIL.
E.g. as on 31.03.2020 you have 100 employees but as on 31.03.2021 you have 110 employees so there is deduction will be available for 10 employees.
- Payment should be made by account payee cheque or account payee bank draft or Electronic Clearing System.
ADDITIONAL EMPLOYEE:
- An employee whose total emoluments per month are less than Rs.25,000, and for whom the Government does not pay the complete contribution under the Employees Pension Scheme.
- An employee who is employed for more than 240 days during the previous years. However, in the apparel manufacturers business the minimum employment period is 150 days.
- An employee who participates in the recognized provident fund.
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