[Opinion] Section 80JJAA – Some Controversial Issues

  • Blog|News|Income Tax|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 21 December, 2023

Recent Posts

Blog, News, Account & Audit

Classification and Disclosure of Late Payment Interest in Financial Statements

Blog, News, GST & Customs

Appellate Authority Can’t Dismiss an Appeal on Maintainability Grounds If Alternative Remedy Has Been Directed by the Court | HC

Latest from Taxmann

Section 80JJAA

CA Bharat Sonkhiya, CA Aakansha Tuteja & Ayushi Todi – [2023] 157 taxmann.com 410 (Article)

In the dynamic landscape of India’s economic policies, certain provisions stand out as catalysts for change. Among these is Section 80JJAA of the Income Tax Act (“ITA”), 1961 — a provision designed not only to benefit businesses but to foster employment generation, aligning with the nation’s vision for inclusive growth.

By providing a tax deduction, the government aims to encourage employers to generate new employment opportunities, incentivize employers to hire more peopleand thereby reduce the rate of unemployment in the country.

Section 80JJAA was inserted in the Income-tax Act by Finance Act 1998 w.e.f. 01-04-1999. The associated lack of clarity is manifested by frequent amendments carried out in this section. The Finance Act, 2016 brought fundamental changes in the course of claiming deduction under this section.

Let’s examine a concise overview of the section both before and after the amendment:

Basis Before Finance Act, 2016 After Finance Act, 2016
Eligible Assessee Indian company being an industrial undertaking engaged in the manufacture or production of article of thing. All assessees who are required to get their accounts audited under section 44AB and whose gross total income includes any profits and gains derived from business.
Additional Cost Deduction of an amount equal to 30% of Additional Wages paid to New Regular Workmen employed in any previous year. Deduction of an amount equal to 30% of Additional Employee Cost paid to Additional Employees employed in any previous year.
Period of Employment of Additional Employee/Workmen Workman shall be in employment for at least 300 days during the year Employee shall be in employment for at least 240 days (150 days in case of business of manufacturing of apparel or footwear or leather products) during the previous year
Conditions The increase in the number of regular workmen should be at least 10 per cent of the existing number of workmen and further that the number of workmen hitherto in employment was at least 100 (later reduced to 50) There must be increase in total number of employees as on the last day of the preceding year and emoluments of such additional employees must be less than Rs. 25,000 per month and participating in Recognised Provident Fund.
New Businesses Deduction shall be available of wages paid to workmen over and above 100 (reduced to 50). The number of such workmen must be at least 100 (reduced to 50) Deduction shall be available of all emoluments paid or payable to employees employed during that year.
Wages v/s Emoluments
Wages paid not payable to new regular workmen employed during the previous year.
Wages can be paid by cash or bank or any other electronic modes.
Emoluments means any sum paid or payable to an employee in lieu of his employment but excludes –
  • any contribution paid or payable by the employer to any pension fund or provident fund or any other fund and
  • any lump-sum payment paid or payable to an employee at the time of termination of his service or superannuation or voluntary retirement
These must be paid by an account payee cheque or account payee bank draft or by use of electronic clearing system or other prescribed electronic modes.
 
Click Here To Read The Full Article

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied