Deduction u/s 80JJAA for Employee cost

Others 380 views 6 replies

Varun

student

90 Points Posted on 09 December 2021

Income tax 80JJAA query-
Section 80JJAA provides deduction @ 30% with reference to additional employment cost for 3 years.
Suppose assessee avails this benefit and claim deduction of Rs. 50000 in 1st year.
In 2nd Year, no of employees reduced as compared to previous year.No additional cost incurred on employees so no additional deduction can be claimed for 2nd year.
But can the assessee claim deduction of 50,000(claimed in 1st year) in 2nd year since the section says the deduction can be claimed for 3 years. (There is no mention of no. of employees remaining constant in second year).

Thank you.

Replies (6)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211715 Points Posted on 09 December 2021

When the no. of employees are reduced, then there is no additional cost to claim u/s. 80JJAA. !!!

Varun

student

90 Points Posted on 09 December 2021

For specific 2nd Year Employee cost - Yes
but section says deduction can be claimed for 3 years. so by that logic assessee claimed 50000 in year 1, the same can be claimed in year 2 and 3. For additional employee cost incurred in year 1.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211715 Points Posted on 09 December 2021

'Employee cost' under the section is not the normal cost, it is any additional cost when additional employee/s are employed.

Read the section carefully....

80JJAA. (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 sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional employee cost incurred in the course of such business in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211715 Points Posted on 09 December 2021

'Employee cost' under the section is not the normal cost, it is any additional cost when additional employee/s are employed.

Read the section carefully....

Varun

student

90 Points Posted on 09 December 2021

Exactly, the additional employment cost for year 1 can be claimed in year 1,2 and 3.
So when I am year 2, I will check whether I have any additional cost, which will be negative since employees left and I will not get benefit of deduction for that year's additional employment cost. But the additional employment cost incurred in year 1 is eligible for benefit for 3 years. So can I claim the deduction in year 2 for additional employee cost incurred in year 1?
Thank you for your replies. I am very confused on the application side of the section.