Section 80JJAA of the Income Tax Act, 1961 is a provision that allows eligible businesses to claim a deduction for additional employee cost incurred for the purpose of promoting employment. Here are the key details of this provision:
Eligible Businesses: Section 80JJAA applies to Indian companies and partnership firms engaged in the manufacturing sector.
Deduction Amount: Businesses can claim a deduction of 30% of additional employee cost incurred during the previous year.
Additional Employee Cost: The additional employee cost refers to the cost of wages paid to new employees (additional workforce) employed during the previous year. It excludes the cost of employees whose employment has been terminated.
Minimum Employment Criteria: To claim the deduction, businesses need to fulfill certain employment criteria. They must employ a minimum number of 10 employees if they were in operation for the entire previous year. If the business was set up during the previous year, it should employ a minimum of 30 employees.
Duration of Deduction: The deduction under Section 80JJAA can be claimed for a period of 3 consecutive assessment years starting from the year in which the additional workforce was employed.
