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Deduction In Respect Of Employment Of New Employees [Section 80-JJAA] w.e.f. A.Y. 2017-18

  1. 30% of Additional Employee Cost to be allowed as Deduction for 3 assessment years [Section 80-JJAA(1)]:

  2. Essential Conditions [Section 80-JJAA(2)]:

  3. Additional Points with reference to Section 80-JJAA

(1) 30% of Additional Employee Cost to be allowed as Deduction for 3 assessment years [Section 80-JJAA(1)]:

Where the gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business, there shall, subject to the conditions specified in section 80JJAA(2), be allowed a deduction of an amount equal to 30% of Additional Employee Cost incurred in the course of such business in the previous year, for 3 assessment years including the assessment year relevant to the previous year in which such employment is provided.

(2) Essential Conditions [Section 80-JJAA(2)]:

No deduction under section 80JJAA(1) shall be allowed,—

  1. if the business is formed by splitting up, or the reconstruction, of an existing business: However, nothing contained in this clause shall apply in respect of a business which is formed as a result of re-establishment, reconstruction or revival by the assessee of the business in the circumstances and within the period specified in section 33B;

  2. if the business is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation;

  3. unless the assessee furnishes alongwith the return of income the report of a chartered accountant giving such particulars in the report as may be prescribed.

(3) Additional Points with reference to Section 80-JJAA

  1. “Additional Employee Cost” means total emoluments paid or payable to additional employees employed during the previous year.

  2. In the case of an existing business, the additional employee cost shall be nil, if—

    1. 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;

    2. emoluments are paid otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account.

  3. In the first year of a new business, emoluments paid or payable to employees employed during that previous year shall be deemed to be the additional employee cost.

  4. “Additional Employee” 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,—

    1. an employee whose total emoluments are more than Rs. 25,000 per month; or

    2. an employee for whom the entire contribution is paid by the Government under the Employees’ Pension Scheme notified in accordance with the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;

    3. an employee employed for a period of less than 240 days [150 days, if the assessee is engaged in the business of manufacturing of apparel (or footwear or leather products from the assessment year 2019-20)] during the previous year; or

    4. an employee who does not participate in the recognised provident fund.

  5. “Emoluments” mean any sum paid or payable to an employee in lieu of his employment by whatever name called, but does not include -

    1. Employer’s contribution to pension fund/provident fund/any other fund for the benefit of employee under any law.

    2. Further, it does not include lump sum payment at the time of termination of service, or superannuation or voluntary retirement, such as gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension, and the like.

  6. If a new employee is employed during the previous year for a period of less than 240 days or 150 days but is employed for a period of 240 days or 150 days, as the case may be, in the immediately succeeding year, he shall be deemed to have been employed in the succeeding year and the benefit of section 80JJAA will apply accordingly.

Deductions to be made in Computing Total Income [Sections 80A to 80U (Chapter VIA)]

Related Topics...Deductions from Gross Total Income

  1. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "PAYMENT & INVESTMENT" ARE ALLOWED FROM SECTION 80C TO 80GGC

    Section 80C Section 80CCC Section 80CCD
    Section 80CCG Section 80D Section 80DD
    Section 80DDB Section 80E Section 80EE
    Section 80G Section 80GG Section 80GGA
  2. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "INCOMES" ARE ALLOWED FROM SECTION 80-IA TO 80U

    Section 80-IA Section 80-IAB Section 80-IAC
    Section 80-IB Section 80-IBA Section 80-IC
    Section 80-ID Section 80-IE Section 80-JJA
    Section 80-JJAA Section 80-LA Section 80-P
    Section 80-PA Section 80-QQB Section 80-RRB
    Section 80-TTA Section 80-TTB Section 80-U
 

 

 
 
 
 
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