Additional Deduction of 90% of an Employeeโs Salary as an additional Deduction!
If any employer is hiring new employees, the government rewards with an EXTRA 30% tax deduction on their salary for three consecutive years on top of the 100% salary expense deduction! Thatโs a total deduction of 190% over three years. Yet, many businesses miss out on this tax benefit under Section 80JJAA just because of lack of awareness or simply because they donโt file Form 10DA on time. Don’t let that happen to you!
Letโs know about it so that one can maximize your tax savings the smart way.
What is Section 80JJAA?
Itโs a hidden tax benefit that allows businesses to claim an additional 30% deduction on the cost of new employees over the period of three years, over and above the usual salary deduction!
Example:
If you hire 20 new employees at an annual salary of โน3,00,000 each, your total salary expenses amounts to โน60,00,000 (โน3,00,000 ร 20 employees).
Under Section 80JJAA, you can claim an additional deduction of โน18,00,000 per year for 3 years, resulting in a total extra deduction of โน54,00,000!
Now imagine the savings for businesses hiring at scale!
Who Can Claim This Deduction?
Any business or profession subject to tax audit under section 44AB.
No deduction shall be allowed if the business is formed by splitting up, or the reconstruction, of an existing business.
if the business is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation;
Eligibility Rules for Employees:
Must be employed for at least 240 days (150 days for assessee engaged in the business of manufacturing of apparel or footwear or leather products).
Salary should be โน25,000 per month or less. Must be registered under EPF or a recognized provident fund.
Smart Tax Tip: If you hire an employee in the last quarter and they donโt complete 240 days, you can claim the deduction in the next financial year instead.
How to Claim? โ Form 10DA is a Must!
Many businesses lose this deduction simply because they forget to file Form 10DA! To claim 80JJAA benefits, the assessee must submit Form No. 10DA in an online before filing the ITR, digitally signed by a Chartered Accountant (CA).
Skipping this form will result in loosing tax savings! Donโt make that mistake.
The Copy Of the section which allows this deduction is as under:
