Sec - 80JJAA
This query is : Resolved
23 July 2011
As per sec 80JJAA there should be atleast 10% increase in the no. of employees in case of an existing business.
So does it means that the 10% increase is checked for all the employees who joined during the year or is it checked for only those employees who worked more than 300 days?
eg. in case where the no. of employees in the begining - 105
no . of employee joined during the year - 84
no . of employee leaved during the year - 54
no. of employees worked for more than 300 days - 09
So in the present case wheather the deduction will be allowed for 9 employees or not?
So does it means that the 10% increase is checked for all the employees who joined during the year or is it checked for only those employees who worked more than 300 days?
eg. in case where the no. of employees in the begining - 105
no . of employee joined during the year - 84
no . of employee leaved during the year - 54
no. of employees worked for more than 300 days - 09
So in the present case wheather the deduction will be allowed for 9 employees or not?
06 August 2011
As per sec 80JJAA there should be atleast 10% increase in the no. of employees in case of an existing business.
So does it means that the 10% increase is checked for all the employees who joined during the year or is it checked for only those employees who worked more than 300 days?
eg. in case where the no. of employees in the begining - 105
no . of employee joined during the year - 84
no . of employee leaved during the year - 54
no. of employees worked for more than 300 days - 09
So in the present case wheather the deduction will be allowed for 9 employees or not?
So does it means that the 10% increase is checked for all the employees who joined during the year or is it checked for only those employees who worked more than 300 days?
eg. in case where the no. of employees in the begining - 105
no . of employee joined during the year - 84
no . of employee leaved during the year - 54
no. of employees worked for more than 300 days - 09
So in the present case wheather the deduction will be allowed for 9 employees or not?
23 July 2025
Your query is about Section 80JJAA of the Income Tax Act, 1961, and whether deduction is allowed for employees who have worked more than 300 days, especially in a scenario where net headcount change is complex.
✅ Understanding Section 80JJAA (as per post-2016 amendment)
Section 80JJAA provides a deduction of 30% of additional employee cost for three assessment years, including the year in which the new employment is provided.
✅ Key Conditions for Deduction (after Finance Act 2016 update):
Applies to all assessees having income from business, who are subject to tax audit under section 44AB.
"Additional employee" means an employee who:
Has been employed during the previous year,
Has worked for at least 240 days (reduced to 150 days for manufacturing of apparel, footwear, leather industry — as amended),
Not employed through a contractor,
Does not draw a salary above ₹25,000 per month,
Is contributing to a recognized provident fund.
"Additional employee cost" is the total emoluments paid or payable to additional employees employed during the previous year.
No deduction allowed in case of restructuring, reconstitution, merger, or acquisition.
✅ Now, Your Case:
Opening number of employees: 105
Employees joined: 84
Employees left: 54
Employees worked more than 300 days: 9
🔍 Key Observations:
The relevant test is not simply 10% increase in headcount, but actual emoluments paid to qualifying "additional employees" who fulfill the criteria:
Worked for at least 240 days (not 300 days unless you're referring to pre-2016 provisions),
Not exited during the year,
Covered under PF and not contractual.
So, your question:
"Will the deduction be allowed for 9 employees?"
Yes — if those 9 employees:
Joined during the financial year,
Worked for at least 240 days (if your industry qualifies for 150-day rule, apply that),
Satisfy the salary and PF conditions,
Are not contractual.
Then deduction will be available on the emoluments paid to these 9 employees.
✅ Clarification on the "10% increase" Rule:
You're confusing with the pre-amendment version of Section 80JJAA, where 10% increase in headcount was tested.
Post-Finance Act 2016, this 10% increase requirement was removed.
Now the focus is only on “additional employees”, and whether they meet the 240-day condition.
✅ Final Conclusion:
✔️ Deduction can be claimed for the 9 employees, not because they represent 10% growth, but because they satisfy the specific conditions of "additional employee" under the current version of Section 80JJAA.
✅ Understanding Section 80JJAA (as per post-2016 amendment)
Section 80JJAA provides a deduction of 30% of additional employee cost for three assessment years, including the year in which the new employment is provided.
✅ Key Conditions for Deduction (after Finance Act 2016 update):
Applies to all assessees having income from business, who are subject to tax audit under section 44AB.
"Additional employee" means an employee who:
Has been employed during the previous year,
Has worked for at least 240 days (reduced to 150 days for manufacturing of apparel, footwear, leather industry — as amended),
Not employed through a contractor,
Does not draw a salary above ₹25,000 per month,
Is contributing to a recognized provident fund.
"Additional employee cost" is the total emoluments paid or payable to additional employees employed during the previous year.
No deduction allowed in case of restructuring, reconstitution, merger, or acquisition.
✅ Now, Your Case:
Opening number of employees: 105
Employees joined: 84
Employees left: 54
Employees worked more than 300 days: 9
🔍 Key Observations:
The relevant test is not simply 10% increase in headcount, but actual emoluments paid to qualifying "additional employees" who fulfill the criteria:
Worked for at least 240 days (not 300 days unless you're referring to pre-2016 provisions),
Not exited during the year,
Covered under PF and not contractual.
So, your question:
"Will the deduction be allowed for 9 employees?"
Yes — if those 9 employees:
Joined during the financial year,
Worked for at least 240 days (if your industry qualifies for 150-day rule, apply that),
Satisfy the salary and PF conditions,
Are not contractual.
Then deduction will be available on the emoluments paid to these 9 employees.
✅ Clarification on the "10% increase" Rule:
You're confusing with the pre-amendment version of Section 80JJAA, where 10% increase in headcount was tested.
Post-Finance Act 2016, this 10% increase requirement was removed.
Now the focus is only on “additional employees”, and whether they meet the 240-day condition.
✅ Final Conclusion:
✔️ Deduction can be claimed for the 9 employees, not because they represent 10% growth, but because they satisfy the specific conditions of "additional employee" under the current version of Section 80JJAA.
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