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Deduction under section 80JJAA (income Tax)


As there are numbers of deductions are available under the Income Tax Act. Which provide us a great scope to save the Tax and motivate us to opt the various insurance schemes. So here we are going to know all about the section 80JJAA which lies under Income Tax Act (1961). The section 80JJAA is a deduction which is allowed to avail on the recruitment of the new, fresh employees. This section has been made for the employers to motivate them for the recruitment of new employees. So this deduction can be claimed by all of the employers for the creation of new employment generation opportunity. It is valid to avail the deduction’s benefit across India.

Eligibility to claim the benefit of the deduction 80JJAA

  • The taxpayer must have to file income tax return on annual basis and 10DA form is mandatory before the due date of return filing and the form 10DA should be reported by chartered accountant.
  • The company of the employer should be subjected to audit u/s 44AB of Act.
  • The business should not be as a transferred business from any of the taxpayer and also business not should be the reconstitute or reorganized.
  • The total number of employee should be greater than the preceding year.

Amount of deduction

The taxpayer can claim the deduction as 30% of the total amount of additional employee cost for three assessment years.

Who are the additional employees and who can be consider as additional employee.

Additional employees are those who increase the value of employee in a business. The employees who have increased the number they should be employed during the previous year whose employments has effected the number of employees till the last date of preceding number. But these followings are the situations which not considers as additional employee.

  • Any of the employees who do not participated in the provident fund.
  • Any employee who’s the entire contribution has not paid by the government under the employee pension scheme.
  • Any employee who’s total employment is more than 25,000 in a single month.
  • Any employee who have been employed for the period of 240 days during the last year and there are different employment period for the apparel manufacturers which is 150 days.

People often asks that if any of the business has been established in the previous year than, can we claim the deduction under 80JJAA so the answer will be yes. Newly established business also can take deduction under 80JJAA.

How to calculate the amount of deduction u/s 80JJAA

Calculate the total amount of the eligible employee during the last Year.

After calculating the amount of eligible employee and multiple it with 30% as the rate of deduction is 30%. And the deduction is allowed for the 3 assessment year. if the employees getting paid by cash than it will not consider as the additional employee or if the employee is not satisfy with the provision of the additional employee.

Form 10A

If any of the taxpayer who want to claim this deduction than he has to file income tax return and also he has to file a report by the chartered accountant which is Form 10A. The form10a is easily available on the website of Income Tax portal.

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