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    Section 80JJAA additional-employee-cost deduction (80JJAA)

    Section 80JJAA rewards formal job creation. A business subject to tax audit can deduct 30% of the additional employee cost (the wages of newly hired eligible employees) for three consecutive years, including the year of hire, over and above the normal salary deduction. An eligible employee earns up to Rs 25,000 a month, works at least 240 days in the year (150 for apparel, footwear and leather), and is enrolled in a recognised provident fund. A CA reports the claim in Form 10DA. Crucially, 80JJAA is one of the very few Chapter VI-A deductions that survives the 22% concessional regime under Section 115BAA.

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    What this relief is, in plain English

    If you take on formal, PF-covered staff, 80JJAA gives you a bonus deduction: 30% of their wages, on top of the normal 100% you already deduct, and you get it for three years running. The catch is the conditions, the new hires must earn up to Rs 25,000 a month, work at least 240 days in the year (150 in apparel, footwear and leather), and be on a recognised provident fund, not casual or contract labour. Your business must be under tax audit and have a CA certify the claim in Form 10DA. The standout feature: while the 22% concessional company regime (115BAA) strips away most deductions, it keeps 80JJAA, so it is a genuine lever for a concessional-rate company to cut tax further by hiring formally.

    How it works

    30% for three years

    The deduction is 30% of the additional employee cost, the emoluments of eligible new employees, allowed for the year of hire and the two following years (three consecutive assessment years), in addition to the normal salary deduction under the general business-expense rules. So genuine headcount growth is rewarded with an extra slice of relief that compounds over the three-year window.

    Who is an eligible employee

    An eligible employee earns monthly emoluments of up to Rs 25,000, is employed for at least 240 days in the year (150 days for the apparel, footwear and leather sectors), and is a member of a recognised provident fund. Casual and contract workers, government-PF-borne employees, and those above the Rs 25,000 threshold do not count. If a late-year hire works fewer than 240 days, the deduction for them begins the next year instead.

    Conditions and the 115BAA bonus

    The business must be subject to tax audit under Section 44AB, must not be formed by splitting up or reconstruction, and a Chartered Accountant must certify the claim in Form 10DA filed with the return. The headline planning point is that 80JJAA is one of the few Chapter VI-A deductions allowed even under the concessional 22% regime (Section 115BAA), which otherwise bars most deductions, making formal hiring a rare way to reduce tax further on that regime.

    Who qualifies

    Interactions with other reliefs

    Section 115BAA

    80JJAA survives the 22% regime, unlike most Chapter VI-A deductions, a rare lever there

    Normal salary deduction

    The 30% is over and above the ordinary deduction for the same wages

    EPF compliance

    Employees must be on a recognised provident fund, so PF enrolment is a precondition

    Common mistakes + audit triggers

    Worked example

    Nexa Services, Noida - growing services company on the 22% (115BAA) regime (2026-27)

    Nexa hires 10 new PF-covered employees on Rs 22,000 a month each, all working more than 240 days in the year. It is on the 115BAA concessional regime.

    Calculation: The additional employee cost is the wages of the 10 eligible new hires (each under Rs 25,000, 240-plus days, recognised PF). Nexa deducts 30% of that cost under Section 80JJAA, on top of the normal 100% salary deduction, and repeats the 30% for the next two years. Because 80JJAA survives the 115BAA regime, it still gets this deduction even at the concessional 22% rate, where most Chapter VI-A deductions would be barred. A CA certifies the claim in Form 10DA.

    Statute reference: Income-tax Act 2025 s.146 (Income-tax Act 1961 s.80JJAA) s.80JJAA; Form 10DA (Rule 19AB); 30% of additional employee cost for 3 years. Source / notes: Year-of-Act note: 80JJAA is available even under the 22% Section 115BAA regime (most Chapter VI-A deductions are not).

    Frequently asked questions

    How much is the 80JJAA deduction?+
    30% of the additional employee cost, the emoluments of newly hired eligible employees, allowed for three consecutive years (the year of hire and the two following), in addition to the normal salary deduction. So genuine headcount growth gives you an extra 30% of those wages as relief, compounding across the three-year window.
    Which employees count for 80JJAA?+
    New employees earning up to Rs 25,000 a month, employed at least 240 days in the year (150 days for apparel, footwear and leather), and enrolled in a recognised provident fund. Casual workers, contract workers, government-PF-borne employees and those above Rs 25,000 do not qualify. A late-year hire below 240 days starts the deduction the following year.
    Does 80JJAA work under the 22% concessional regime?+
    Yes, and that is its standout feature. The 22% regime under Section 115BAA bars most Chapter VI-A deductions, but 80JJAA is one of the few that survive it. So a company on 115BAA can still reduce its tax further by hiring formal, PF-covered staff, a rare planning lever on the concessional regime.
    What do I need to file to claim 80JJAA?+
    Your business must be subject to tax audit under Section 44AB, and a Chartered Accountant must certify the additional-employee-cost computation in Form 10DA, filed with your return. You also must not have been formed by splitting up or reconstructing an existing business. Keep PF records and attendance evidence to support the eligibility of each counted employee.

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