Section 80JJAA New Employment Deduction Calculator

How the calculation works

1. An employee counts if monthly emoluments are ₹25,000 or less, the days worked meet the minimum (240, or 150 for apparel, footwear and leather), PF is contributed, the whole EPS contribution is not paid by the government and pay is through a bank.
2. Eligible cost = monthly pay × months paid for qualifying employees. First-year deduction = 30% of that cost.
3. The employer-level gate also needs a new business or an increase in headcount, a tax audit report, and no reorganised business.

Background and professional notes

A tax incentive based on genuine additional employment

Section 80JJAA permits a deduction measured at 30% of additional employee cost for three assessment years, subject to detailed statutory conditions. For Tax Year 2026–27, the corresponding provision is Section 146 of the Income-tax Act, 2025. The first challenge is not the multiplication but demonstrating that each employee truly increases employment and meets the definition. The dashboard therefore screens individual payroll rows and also asks for the opening and closing headcount and employer-level legal gates.

Who belongs in the eligible employee pool

The law generally excludes employees with monthly emoluments above ₹25,000, certain Government-funded pension contributions, those not participating in recognised PF and workers below the required days threshold. The ordinary test is 240 days; eligible manufacturers of apparel, footwear or leather products can use 150 days. Employee continuity into the next year can change the year of inclusion and requires separate cohort monitoring. The tool uses days and payment month inputs supplied in the upload; it does not inspect PF portal records.

Worked payroll deduction example

Suppose two valid new employees earn ₹23,000 per month for twelve months and ₹25,000 per month for ten months. Their screened base is ₹5,26,000 and 30% is ₹1,57,800. A third employee earning ₹26,000 monthly is not counted, even if employed all year. The result is a possible first-year deduction subject to the company headcount and audit conditions. Each subsequent year must be measured using actual qualified emoluments and the statutory timing rules, rather than mechanically repeating ₹1,57,800.

The audit-ready cohort file

Maintain appointment dates, identity records, joining and exit records, bank payments, monthly wage slips, employee PF identifiers, employer EPS funding evidence, current and prior-year headcounts and the accountant’s report. Screen rearranged or reconstructed businesses separately. The output is not a Form 10DA or another prescribed report. Export the employee table and give exceptions to HR and payroll before the tax professional computes the return position.

Assumptions and what this calculator does not cover

• First-year estimate only; later years need an actual cohort ledger.
• For tax year 2026-27 the provision is section 146 of the Income-tax Act, 2025.
• Do not include salaries above ₹25,000 per month.
• The 150-day exception applies only to the specified manufacturing businesses.
• First-year amount is indicative; three-year eligibility requires continuing review.

Official sources and further reading

• Income Tax Department: section 80JJAA

Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.