Section 80JJAA Deduction –
Incentivizing Employment Generation in India 
 

What is Section 80JJAA? 

 

Section 80JJAA provides an additional deduction of 30% of salary/wages paid to new employees hired during the financial year. This deduction is allowed for three consecutive assessment years, including the year in which such employment is created. 

It applies to businesses that are subject to tax audit under Section 44AB. 

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Meaning of Salary “Emoluments” under Section 80JJAA 

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The term "emoluments" in the context of Section 80JJAA refers to the total monthly remuneration paid or payable to an employee in accordance with the terms of the employment contract.

However, it does not include: 

• Employer contributions to provident fund, pension fund, or any other retirement benefits, 

• Any lump-sum payments like gratuity, leave encashment, severance pay, or voluntary retirement compensation. 

This clarification ensures that only regular salary or wages are considered for calculating the additional employee cost eligible for the deduction. Businesses must track and report these components carefully while preparing Form 10DA. 

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Who Can Claim the Deduction? 

 

You can claim deduction under this section if: 

• You are an assesses having income from business and are liable for tax audit under Section 44AB. 

• Your business has added new employees in the financial year. 

• You’re not claiming the benefit for employees in professions, or for contractors (only salaried employees count). 

 

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Key Conditions to Qualify for Deduction 

 

Here are the major conditions to be fulfilled: 

 

New Employee Definition: 

• Employed during the previous year. 

• Salary/wages (emoluments) not exceeding ₹25,000 per month. 

• Participating in recognized provident fund (PF). 

• Employed for at least 240 days in the previous year (150 days for apparel, footwear, and leather industries). 

 

Employee Type Exclusion: 

• Casual or contract workers. 

• Employees for whom the entire contribution is paid by the government. 

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Additional Employee Cost: 

• Refers to the incremental cost of employing additional staff, calculated as salary paid to new qualifying employees. 

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Quantum of Deduction: 

• 30% of additional employee cost is allowed as a deduction. 

• This deduction is available for three years, including the year in which employment is created. 

• If the minimum employment period is not completed in the first year, but completed in the second year, the deduction starts from the second year. 

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Eligible Industries with Relaxed Conditions 

 

For the apparel, footwear, and leather industries, the minimum employment period is 150 days instead of 240. This relaxation helps promote labor-intensive sectors and supports India’s manufacturing goals. 

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Filing Requirements: Prescribed Form 

 

To claim the deduction, the assesses must file Form 10DA a certificate from a Chartered Accountant, verifying the details of new employment and compliance with conditions under the section. 

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• Form 10DA must be submitted online before filing the income tax return (ITR). 

• It includes details such as: 

  • Number of new employees. 

  • Salary paid. 

  • PF details. 

  • Industry-specific employment period. 

 

 

Important Notes & Pitfalls to Avoid 

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• Ensure timely PF registration and deposit to establish employee eligibility. 

• Maintain proper documentation for each qualifying employee. 

• File Form 10DA in time to avoid disallowance of the deduction. 

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Why This Deduction Matters 

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Section 80JJAA aligns with India’s vision of formal employment generation. By offering tangible tax benefits to employers, it encourages sustainable job creation and rewards businesses that invest in human capital. 

It is especially relevant for: 

• Startups scaling up operations. 

• Manufacturing firms looking to grow workforce. 

• Labour-intensive industries seeking incentives for new hiring. 

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💡 Pro Tip 

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Claiming 80JJAA can significantly reduce tax outgo over a three-year period, especially for growing businesses. However, non-compliance or poor documentation can result in loss of benefits. 

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🤝 Need Help Claiming Section 80JJAA Deduction? 

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Navigating tax laws can be complex, especially when dealing with employment thresholds, industry-specific norms, and statutory forms. If you're hiring new employees or planning to expand your team, we can help you maximize your tax savings under Section 80JJAA. 

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📩 Connect with us today our team of professionals can assist you with Form 10DA, eligibility assessment, documentation, and end-to-end filing support to ensure you claim what you rightfully deserve.