Incentive for employment generation

At present, under section 80-JJAA of the Act, a deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year. However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. In order to encourage creation of new employment, it is proposed to extend this relaxation to footwear and leather industry.

Further, it is also proposed to rationalize this deduction of 30% by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.

This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

[Clause 27]

Employment generation incentive extended to footwear and leather, with carry forward eligibility for employees meeting minimum service later. The proposal extends the existing 150 day employment minimum concession under section 80-JJAA from the apparel sector to include footwear and leather industries, allowing those employers to claim the additional 30% deduction on emoluments for new employees. It also permits claiming the additional deduction where a new employee works less than the minimum period in the first year but subsequently meets the minimum service requirement. The amendment is effective from 1 April 2019 and applies to the assessment year beginning thereafter.