Section 80JJA of the Income Tax Act

Section 80JJA provides tax benefits to businesses working with bio-waste. It allows a tax deduction for profits made by collecting, processing, or recycling bio-waste into products like biogas, manure, or fertilizers. This section promotes eco-friendly practices and supports waste management.

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What is Section 80JAA of the Income Tax Act?

Section 80JJA is a provision under the Income Tax Act, 1961 that offers tax deductions to individuals or businesses generating income from collecting, processing, or recycling biodegradable waste. This incentive aims to promote eco-friendly practices and sustainable waste management.

This provision encourages investment in waste recycling while supporting environmental conservation efforts. Use an income tax calculator to help you assess the tax impact of Section 80JJA on your income.

Section 80JJA Deduction Benefits for FY 2024-25 (AY 2025-26)

Taxpayers involved in biodegradable waste activities can claim a 100% deduction under Section 80JJA.
This deduction applies to profits earned from such activities.
The benefit is available for up to five consecutive assessment years.

Features of Section 80JJA of the Income Tax Act

The key features of Section 80JJA of the Income Tax Act, 1961 are as follows:

Feature	Description
Objective	Encourages waste recycling investment and supports environmental conservation.
Eligible Businesses	Applies to businesses involved in collecting, processing, treatment, and using biodegradable waste to produce energy, organic manure, or eco-friendly products.
Tax Deduction	Provides 100% deductions for profits from recycling bio-waste into products like biogas or fertilizers.
New Units	Available for new units established after April 1, 2016, focused on waste management.
Employment Requirement	Deduction is allowed only if new employment is created for individuals.
Application of Deduction	Deduction is available in the year of employment creation, spread over the following years.
No Carry Forward	This deduction cannot be carried forward if unused.

Eligibility Criteria to Claim Section 80 JJA Tax Benefits

To qualify for the deduction under Section 80JJA, businesses must meet specific conditions:

New Business or Unit: The business claiming the deduction must be a new unit established for bio-waste collection, processing, or recycling.
Commencement of Operations: The unit should have commenced its operations within the previous five years.
Registration and Location: The business must be registered and operational in India.
Compliance with Environmental Regulations: The business must adhere to relevant environmental laws and regulations.
Income Inclusion: The income from biodegradable waste activities must be included in the gross total income of the business.
Eligible Business Type: Must be involved in bio-waste collection, processing, or recycling. Businesses should convert waste into products like biogas, manure, or fertilizers.
Profit Requirement: The business must earn profits from the recycling or processing of bio-waste.
Qualified Activities: Activities must focus on sustainable waste management and eco-friendly practices.
No Claim on Other Deductions: Must not claim any other deductions for the same business activity under other sections.

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Examples of Section 80JJA of the Income Tax Act, 1961

Let us consider the following examples to help understand the Section 80 JJA taxation:

Example 1: Biogas Production Company

Company: Green Energy Solutions Pvt. Ltd.
Fiscal Year: 2023-24
- Total Income from Biodegradable Waste Processing: ₹8 lakh
- Eligible Deduction Under Section 80JJA: Since the profit is less than ₹5 lakh, the deduction will be ₹5 lakh.
In this case:
- Deduction = min⁡ (Total Income OR ₹5 lakh) = ₹5 lakh

Example 2: Organic Fertilizer Manufacturing

Company: Eco-Farms Ltd.
Fiscal Year: 2023-24
- Total Income from Processing Biodegradable Waste: ₹10 lakh
- Eligible Deduction Under Section 80JJA: The maximum deduction allowed is ₹5 lakh.
Thus:
- Deduction = min ⁡(₹10 lakh OR ₹5 lakh) = ₹5 lakh

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Conclusion

Section 80JJA of the Income Tax Act offers tax benefits to businesses involved in processing, treating, or collecting biodegradable waste. It encourages environmentally friendly practices by providing deductions on profits earned from such activities. This provision supports sustainable waste management while benefiting businesses.

FAQs

What is Section 80JJA of the Income Tax Act?

Section 80JJA provides tax deductions for businesses engaged in the collection, processing, and recycling of biodegradable waste into eco-friendly products like biogas or fertilizers.
What is the 80JJA deduction?

The 80JJA deduction allows eligible businesses to claim a 100% deduction on profits derived from the collection, processing, and treatment of biodegradable waste. The maximum deduction is capped at ₹5 lakh, whichever is lower.
Who is eligible for 80JJA?

Businesses involved in biodegradable waste recycling and new units established after April 1, 2016, that create new employment are eligible.
What is the due date for Section 80JJA form?

The form must be submitted along with the income tax return before the due date for filing the return, typically July 31 for non-audit cases.

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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