The existing provisions
contained in section 80JJAA of the Income-tax Act provide for a deduction of an
amount equal to thirty per cent of additional wages paid to the new regular
workmen employed in any previous year by an Indian company in its industrial
undertaking engaged in manufacture or production of article or thing. The
deduction is available for three assessment years including the assessment year
relevant to the previous year in which such employment is provided.
No deduction under this section is allowed if
the industrial undertaking is formed by splitting up or reconstruction of an
existing undertaking or amalgamation with another industrial undertaking.
The tax incentive under section 80JJAA was
intended for employment of blue collared employees in the manufacturing sector
whereas in practice, it is being claimed for other employees in other sectors
also. It is, therefore, proposed to amend the provisions of section 80JJAA so
as to provide that the deduction shall be available to an Indian Company
deriving profits from manufacture of goods in its factory. The deduction shall
be of an amount equal to thirty per cent of additional wages paid to the new
regular workmen employed by the assessee in such factory, in the previous year,
for three assessment years including the assessment year relevant to the
previous year in which such employment is provided.
It is also proposed to provide that the
deduction under this section shall not be available if the factory is hived off
or transferred from another existing entity or acquired by the assessee company
as a result of amalgamation with another company.
This amendment will take effect from 1st April,
2014 and will, accordingly, apply in relation to assessment year 2014-15 and
subsequent assessment years.
