Fog on Tax Sops for New Jobs Likely to Clear Out

Income tax authorities have proposed changes to a provision in the I-T law dealing with tax breaks for new jobs added, in order to provide better clarity on the section.

Section 80JJAA of the I-T Act, 1961 provides for tax breaks to companies for three years on each new job added with a monthly claimed, however, should have worked for a minimum of 240 days during the year in that organization.

The tax authorities have proposed that the law be amended to provide for deduction only against validation by either the Provident Fund or Employees’ State Insurance authorities, or both, on claims of a corporate house on the number of fresh jobs added, official privy to the discussions told ET.

This, they said will help give clarity on tax treatment on the addition of new jobs, both for the tax authorities and companies. This would also help the government achieve the purpose behind introducing the provision.

I-T official ET spoke to said Section 80JJAA, in its current form, has left things open for interpretation. The authorities are hopeful the upcoming union Budget may address this aspect.

The government introduced the section to encourage companies to create jobs, especially for unskilled and semi-skilled workers as they mostly tend to get left out of the organised workforce and lose protective covers such as PF and ESI.

The subject figured in discussions at the Central Board of Direct Taxes (CBDT) as some officials felt an amendment would help cover grey areas and prevent litigations.

The I-T department’s suggestion to the board followed a survey from the I-T investigation wing on a leading provider of staffing solutions. The tax department insisted that the company had wrongfully claimed tax breaks. The company, however, has refuted any wrongdoing. S-ET

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