Direct Tax Laws & International TaxationMCQQuestion 5880 of 501
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What is the quantum and period of deduction allowable under Section 80JJAA of the Income-tax Act, 1961 in respect of employment of new qualifying employees?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option B — 30% of additional employee cost for 3 consecutive assessment years

All Options:

  • A100% of additional employee cost for 1 assessment year
  • B30% of additional employee cost for 3 consecutive assessment years ✓
  • C50% of additional employee cost for 5 assessment years
  • D15% of additional employee cost for 3 assessment years

Detailed Solution & Explanation

Deduction in respect of employment of new employees (Section 80JJAA):
1. **Eligible Assessee**: An assessee to whom Section 44AB applies (business having tax audit).
2. **Quantum of Deduction**:
Deduction=30% of additional employee cost for 3 consecutive assessment yearsDeduction=30\displaystyle \text{Deduction} = 30\%  of additional employee cost for 3 consecutive assessment years\displaystyle \text{ of additional employee cost for 3 consecutive assessment years}
3. **Qualifying Conditions**:
- Total emoluments paid to employee shall not exceed **₹25,000 per month**.
- Employee must be employed for a minimum period of **240 days** in the previous year (or **150 days** for apparel/footwear/leather industries).
- Employee participates in recognized provident fund.
Hence, **Option B** is the correct answer.

More Questions from Direct Tax Laws & International Taxation

While computing 'Book Profit' for the purposes of Minimum Alternate Tax (MAT) under Section 115JB of the Income-tax Act, 1961, which of the following items is DEDUCTED from the net profit as per Statement of Profit and Loss?

Orion India Ltd. sold 5,000 units of specialty microchips to its associated enterprise (AE) Orion Inc., USA at $120 per unit. In an uncontrolled transaction, Orion India sold 1,000 identical units to an independent third party Beta Corp in USA at $150 per unit. Orion India provides 3 months credit to Beta Corp (cost of credit = $5 per unit), whereas sales to the AE are against 100% advance payment. Compute the Arm's Length Price (ALP) per unit under the Comparable Uncontrolled Price (CUP) method.

Alpha Retail Ltd., a resident Indian company, paid ₹5,00,000 to CloudNet Inc. (a non-resident tech entity having no Permanent Establishment in India) for online advertising services displayed on its search engine during FY 2024-25. What is the Equalisation Levy rate and amount to be deducted by Alpha Retail Ltd. under Chapter VIII of the Finance Act, 2016?

Buyer X Ltd. (turnover ₹25 crores in preceding FY) purchases goods worth ₹80 lakhs from Seller Y Ltd. (turnover ₹15 crores in preceding FY) during FY 2024-25. Both buyer and seller exceed the ₹10 crore turnover threshold. How do Section 194Q (TDS on purchase of goods) and Section 206C(1H) (TCS on sale of goods) interact?

Solaris Power Infra Ltd., a domestic company, presents the following Profit and Loss Account for the year ended 31st March, 2024: - Net Profit as per Statement of Profit and Loss: ₹80,00,000 - Debits in P&L: - Provision for Income-tax: ₹12,00,000 - Transfer to General Reserve: ₹8,00,000 - Provision for doubtful debts: ₹5,00,000 - Provision for unascertained liabilities: ₹4,00,000 - Depreciation charged: ₹16,00,000 (includes depreciation on revalued assets of ₹3,00,000) - Credits in P&L: - Amount withdrawn from Revaluation Reserve: ₹3,00,000 - Dividend from domestic company: ₹2,00,000 Other information: - Brought forward business loss as per books: ₹10,00,000 - Unabsorbed depreciation as per books: ₹6,00,000 - Total income computed under normal provisions of Income-tax Act is ₹35,00,000 (tax rate 25% + 4% HEC = 26%). Compute the Book Profit and Tax Liability of the company under Section 115JB for Assessment Year 2024-25.

What is the effective tax rate (including mandatory surcharge and Health & Education Cess) for a domestic company opting for the concessional taxation regime under Section 115BAA of the Income-tax Act, 1961?

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