While several industrial establishments take advantage of common deductions available under Section 36, Section 80IA, and even Section 80GGB, not many are aware of Section 80J. Under Section 80J, some newer industrial establishments and even some hotel businesses and ships can claim a tax deduction.

Let us have a detailed look at what Section 80J is and who can benefit from this tax deduction-

What is Section 80J of the IT Act?

As mentioned above, Section 80J offers a tax deduction to industrial establishments, hotel businesses, and ships in certain cases. It is further divided into two subsections:
  • Section 80JJA- It allows tax deductions on the profits and gains generated by industrial establishments involved in collecting or processing biodegradable waste.
  • Section 80JJAA- It allows some businesses to claim a tax deduction on the wages paid to new workers.

Deductions Available Under Section 80JJA

Businesses involved in collecting or processing biodegradable waste, which is then used for producing organic manure, biogas, power, and briquettes or pellets for fuel, can claim tax deduction under Section 80JJA. An eligible business can claim a tax deduction of 100% of the generated income or up to Rs. 5 lakhs, whichever is lower, for 5 years from when the business operations were started.

Deductions Available Under Section 80JJAA

If your industrial establishment is involved in the production or manufacturing of a product or an article, then you can claim under Section 80JJAA for a tax deduction of 30% on the wages paid to new workers for up to 3 years.

For instance, if an eligible industrial establishment hires hundred new regular workers, it can claim a tax deduction on 30% of the wages paid to the hundred new workers for up to 3 years.

Eligibility for Claiming Tax Deduction Under Section 80JJAA

The eligibility requirements for claim tax deductions under Section 80JJAA are as follows-
  • The industrial establishment should be an Indian company from the manufacturing sector
  • It should be formed by reconstruction, revival, or re-establishment of an existing business
  • The deduction is only available on hiring new blue-collared employees
  • The business should have at least 50 employees to claim this tax deduction
  • The payable emolument or the payment, excluding PF contribution, retirement benefits, superannuation fund, etc. of the new employees, should not be more than Rs. 25,000
  • The financial account of the assessee should be audited under Section 44AB

Claiming Tax Deduction Under Section 80J

Section 80J income tax deductions can help eligible industrial establishments save a considerable amount of money in tax payments.
If you are involved in collecting or processing biodegradable waste or own a re-constructed manufacturing company, try to know more about Section 80J of the IT Act and make the best use of the available deductions.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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