Explanation
Section 80JJAA incentivises formal employment creation by allowing a 30% deduction from business income on the 'additional employee cost' for three consecutive assessment years. An 'additional employee' is a new regular workman employed during the year at a salary not exceeding ₹25,000 per month. The employee must be enrolled with the Employees' Provident Fund Organisation (EPFO) within the required time. The employee must have been employed for at least 240 days in the year (150 days for certain specified industries like apparel, leather, and footwear). The business must be subject to mandatory tax audit under §44AB. The business must have seen at least a 10% increase in total employees compared to the previous year — net new hires. The deduction is available only under the old tax regime. Companies that take on apprentices, contractual workers, or part-time staff cannot count them as 'additional employees'. The deduction applies on the entire additional employee cost (salary paid), not just the EPFO contribution. This is a significant deduction for labour-intensive industries and should be actively modelled by eligible businesses. Verify on the income-tax portal before filing.