Statutory position — section 80LA: a unit in an IFSC gets one hundred per cent for ten consecutive years out of fifteen, at its option
CBDT Circulars & InstructionsCuts both ways
My client has set up a unit in GIFT City. What exactly is the section 80LA deduction, how long does it last, and what has to go with the return?
Section 80LA(1A) allows a Unit of an International Financial Services Centre a deduction of one hundred per cent of the income referred to in section 80LA(2), for any ten consecutive assessment years, at the option of the assessee, out of fifteen years beginning with the assessment year relevant to the previous year in which the permission or registration was obtained. The permission or registration counted for that starting point is one under clause (a) of section 23(1) of the Banking Regulation Act 1949, or under the Securities and Exchange Board of India Act 1992, or under the International Financial Services Centres Authority Act 2019.
Statutory position — s.80JJAA: thirty per cent of additional employee cost for three years, and every condition that defeats it
CBDT Circulars & InstructionsCuts both ways
My client wants to claim s.80JJAA for new hires. What exactly is the deduction, and which conditions actually cause claims to fail?
Section 80JJAA gives an assessee to whom s.44AB applies, whose gross total income includes profits and gains derived from business, a deduction of thirty per cent of the additional employee cost incurred in the course of that business in the previous year, for three assessment years including the assessment year relevant to the previous year in which the employment is provided. The conditions that defeat claims in practice are in the Explanation, not in the operative sub-section: an employee earning more than twenty-five thousand rupees a month is not an "additional employee", nor is one employed for less than two hundred and forty days in the previous year (one hundred and fifty days for a manufacturer of apparel, footwear or leather products), nor one who does not participate in a recognised provident fund, nor one whose entire Employees' Pension Scheme contribution is paid by the Government. And the additional employee cost is nil for an existing business if there is no increase in the total number of employees over the last day of the preceding year, or if the emoluments are paid otherwise than by account payee cheque, account payee bank draft, electronic clearing system through a bank account, or such other prescribed electronic mode.