Income-tax Act, 2025

Deduction in respect of additional employee cost. - Section 146

Deduction in respect of additional employee cost.

146. (1) Subject to the conditions specified in sub-sections (2) and (3), if the gross total income of an assessee, to whom section 63 applies, includes any profits and gains derived from business, a deduction of an amount equal to 30% of additional employee cost incurred in the course of such business in the tax year shall be allowed.

(2) The deduction referred to in sub-section (1) shall be allowed for three consecutive tax years, beginning from the tax year in which the employment is provided.

(3) The deduction under sub-section (1) shall not be allowed, if

(a) the business is formed by splitting up, or the reconstruction, of an existing business; or

(b) the business is acquired by the assessee through transfer from any other person or as a result of any business reorganisation; or

(c) the assessee does not furnish the report of an accountant, before the specified date as referred to in section 63, giving the particulars in the report, as may be prescribed.

(4) The condition referred to in sub-section (3)(a) shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 140(4), in the circumstances and within the period specified in said section.

(5) For the purposes of this section,

(a) "additional employee cost" means

(i) the total emoluments paid or payable to additional employees employed during the tax year; or

(ii) emoluments paid or payable to employees employed during the tax year, where that year is the first year of a new business,

and it shall be nil in the case of an existing business, if

(A) there is no increase in the number of employees from the total number employed as on the last day of the preceding tax year; or

(B) emoluments ar .... To read the full section download the app from Google Play store