CBDT notifies new Form 10DA for claiming new employment incentive deduction under section 80JJAA

This Tax Alert explains the significant changes made in Form 10DA of Income Tax Rules, 1962 by Notification issued by the Central Board of Direct Taxes.

Form 10DA is a report to be issued by a practising Chartered Accountant certifying the amount of deduction to be claimed by a taxpayer under section (s.) 80JJAA of the Indian tax laws (ITL). S.80JJAA is an incentive deduction provision for encouraging recruitment of new employees. It grants deduction of 30% of additional employee cost incurred by the taxpayer for three tax years starting from the tax year in which such employment is provided.

The changes in Form 10DA are largely consequential to the amendment made by Finance Act, 2018 (FA 2018) in respect of new employees, who do not complete 240 days in first year but complete 240 days in second year, to treat them as new employees in second year. The changes also clarify the legal position that in any tax year, the taxpayer is entitled to deduction in respect of new employees employed over three years viz. current tax year and two preceding years.