About 80JJAA: Deduction in respect of employment of new employees

Eligible assessee: Any assessee engaged in business and liable for tax audit u/s 44ab

Deduction: 30% of Additional employee cost for 3 consecutive years

Meaning of additional employee cost:

Total emoluments paid or payable to additional employees during previous financial year

In case of existing business, additional employee shall be nil if,

1. there is no increase in total number of employees during previous financial year Or
2. if emoluments paid in cash

This can be explained with example:

Case 1:

Total no of employees as on 31/03/2018: 100
No of employees left: 10
No of employees recruited: 5
Total no of employees as on 31/03/2019: 95
Deduction will not be available

Case 2:

Total no of employees as on 31/03/2018: 100
No of employees left: 10
No of employees recruited: 20
Total no of employees as on 31/03/2019: 110
Deduction will be available for 10 additional employees @ 30% of additional employee cost for 3 consecutive years

In case of new business, employees recruited during previous financial year shall be taken as additional employee. However emoluments shall be paid other than cash.

Additional employee does not include:

• emoluments > 25,000 pm
• employee worked less than 240 days in previous financial year. For manufacturing of apparel or footwear or leather product 150 days will be applicable.
• employee whom contribution is paid by central govt under employee pension scheme as per Employee Provident Fund and Misc Provision Act,1952

NOTE: If an employee worked less than 240 or 150 days during previous year but worked more than 240 or 150 days in succeeding year, then it is deemed to be recruited in the succeeding year and deduction @ 30% shall be applicable from that year.