Section 80JJAA - Deduction in respect of employment of new employees - Income-tax Act, 1961

10 [ Deduction in respect of employment of new employees. 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. (2) No deduction under sub-section (1) shall be allowed,- (a) if the business is formed by splitting up, or the reconstruction, of an existing business: Provided that nothing contained in this clause shall apply in respect of a business which is formed as a result of re-establishment, reconstruction or revival by the assessee of the business in the circumstances and within the period specified in section 33B; (b) if the business is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation; (c) unless the assessee furnishes 15 [ the report of the accountant, as defined in the Explanation below sub-section (2) of section 288, before the specified date referred to in section 44AB ] giving such particulars in the report as may be prescribed. Explanation .-For the purposes of this section,- (i) additional employee cost means the total emoluments paid or payable to additional employees employed during the previous year: Provided that in the case of an existing business, the additional employee cost shall be nil, if- (a) there is no increase in the number of employees from the total number of employees employed as on the last day of the preceding year; (b) emoluments are paid otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a 14 [ bank account or through such other electronic mode as may be prescribed ] : Provided further that in the first year of a new business, emoluments paid or payable to employees employed during that previous year shall be deemed to be the additional employee cost; (ii) additional employee means an employee who has been employed during the previous year and whose employment has the effect of increasing the total number of employees employed by the employer as on the last day of the preceding year, but does not include- (a) an employee whose total emoluments are more than twentyfive thousand rupees per month; or (b) an employee for whom the entire contribution is paid by the Government under the Employees Pension Scheme notified in accordance with the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952; or (c) an employee employed for a period of less than two hundred and forty days during the previous year; or (d) an employee who does not participate in the recognised provident fund; 11 [ Provided that in the case of an assessee who is engaged in the business of manufacturing of apparel 12 [or footwear or leather products], the provisions of sub-clause (c) shall have effect as if for the words two hundred and forty days , the words one hundred and fifty days had been substituted ] 13 [ Provided further that where an employee is employed during the previous year for a period of less than two hundred and forty days or one hundred and fifty days, as the case may be, but is employed for a period of two hundred and forty days or one hundred and fifty days, as the case may be, in the immediately succeeding year, he shall be deemed to have been employed in the succeeding year and the provisions of this section shall apply accordingly;] (iii) emoluments means any sum paid or payable to an employee in lieu of his employment by whatever name called, but does not include- (a) any contribution paid or payable by the employer to any pension fund or provident fund or any other fund for the benefit of the employee under any law for the time being in force; and (b) any lump-sum payment paid or payable to an employee at the time of termination of his service or superannuation or voluntary retirement, such as gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and the like. (3) The provisions of this section, as they stood immediately prior to their amendment by the Finance Act, 2016, shall apply to an assessee eligible to claim any deduction for any assessment year commencing on or before the 1st day of April, 2016.] ******************** Notes :- 1. Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. 2. Substituted vide Finance Act, 2013 w.e.f. 1st day of April, 2014 , before it was read as, (1) Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from any industrial undertaking engaged in the manufacture or production of article or thing, 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 wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided. 3. Substituted vide Finance Act, 2013 w.e.f. 1st day of April, 2014 , before it was read as, ( a ) if the industrial undertaking is formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking; 4. Substituted vide Finance Act, 2013 w.e.f. 1st day of April, 2014 before it was read as, undertaking 5. Substituted vide Finance Act, 2013 w.e.f. 1st day of April, 2014 before it was read as, undertaking 6. Inserted vide Finance Act, 2013 w.e.f. 1st day of April, 2014 7. Omitted vide THE FINANCE ACT, 2015 w.e.f. 1st day of April, 2016, before it was read as, being an Indian company, 8. Substituted vide THE FINANCE ACT, 2015 w.e.f. 1st day of April, 2016, before it was read as, 3 [ (a) if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company] 9. Substituted vide THE FINANCE ACT, 2015 w.e.f. 1st day of April, 2016, before it was read as, one hundred workmen 10. Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of April, 2017 before it was read as, 1 [Deduction in respect of employment of new workmen. 80JJAA. 2 [ (1) Where the gross total income of an assessee, 7 [***] includes any profits and gains derived from the manufacture of goods in a factory, 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 wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided. ] (2) No deduction under sub-section (1) shall be allowed- 8 [(a) if the factory is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation;] ( b ) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed. Explanation .- For the purposes of this section, the expressions,- ( i ) additional wages means the wages paid to the new regular workmen in excess of 9 [fifty workmen] employed during the previous year : Provided that in the case of an existing 4 [factory], the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such 5 [factory ] as on the last day of the preceding year; ( ii ) regular workman , does not include- ( a ) a casual workman; or ( b ) a workman employed through contract labour; or ( c ) any other workman employed for a period of less than three hundred days during the previous year; ( iii ) workman shall have the meaning assigned to it in clause ( s ) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947).] 6 [(iv) factory shall have the same meaning as assigned to it in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948).] 11. Inserted vide THE TAXATION LAWS (AMENDMENT) ACT, 2016 w.e.f. 1st day of April, 2017 12. Inserted vide THE FINANCE ACT, 2018 , w.e.f. 1st day of April, 2019 13. Inserted vide THE FINANCE ACT, 2018 , w.e.f. 1st day of April, 2019 14. Substituted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-04-2020 before it was read as bank account 15. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020 before it was read as along with the return of income the report of the accountant, as defined in the Explanation to section 288