Deduction for additional employee cost incentivises formal hiring through multi year tax relief subject to reporting and anti abuse conditions.
Clause 146 allows a deduction equal to 30% of additional employee cost for three consecutive tax years where an assessee with business income increases employee numbers and pays emoluments through prescribed modes; claims are disallowed for splitting up, reconstruction, transfer or reorganisation except for revived sick units, and are subject to exclusions based on emolument ceilings, provident fund participation, pension contribution arrangements and minimum tenure thresholds, with the deduction claim contingent on a prescribed accountant's report.