FM extends Sec 80JJAA benefits to all audited companies to leg up job creation

NEW DELHI : EXTENDING the benefit of Section 80JJAA of the Income Tax Act to all the assessees irrespective of the fact whether they derive their income from manufacturing goods in factory or not, subject to the condition that statutory audit is applicable to them, is actually is a long standing demand of the industry. In the present

times when service sector contributes almost half of the GDP, the extension of this benefit to the service industry will prove to be a great relief.

The existing Section 80JJAA of the Income Tax Act states that Where the gross total income of an assessee, being an Indian company, 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), is 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

But from this budget the scenario will change as the benefit will be going to available to every assessee i.e. the limitation of being any other company except a manufacturing company has been done away with. Now all the assessees who are subject to statutory audit can claim a deduction of 30% of the emoluments paid to new regular employees for a period of 3 years. The minimum number of days for which the employee should be employed during the year has also reduced from 300 to 240 days. However no deduction will be admissible in respect of employees whose monthly emoluments exceed INR 25,000. Deduction will not be passed on to employees for whom the Government is paying the entire EPS contribution.

If we look carefully it is a much needed push and encouragement to the fastest growing sector. It will further contribute in the employment generation and adds to the growth of the country.

This amendment will take effect from 1st April, 2017 and will accordingly apply in relation to assessment year 2017-18 and subsequent assessment years.