TIMESOFINDIA.COMThe salary structure in more than 40% of companies in India is tax inefficient, resulting in reduced take-home pay for employees, a study by Pluxee India shows.
If these employers optimised their benefits packages, employees could see an annual increase of about Rs 1 lakh in their take-home salaries, says the study shared exclusively with ET.
The study, based on an email survey sent to more than 16,000 executives working across the departments of human resources, finance and administration, elicited responses from 97 companies across sectors.
As per the income tax rules, a salaried employee is eligible for certain tax exemptions. Spending on specific purposes by individuals—performing official duties—allows them to avail of these tax exemptions.
The study also says that almost three in every four employers in the country feel their employees expect a higher in-hand salary but are unaware of tax-saving possibilities.
The Pluxee study found that while 56% of decision-makers are aware that workers can increase their annual take-home salary through benefits, 45% of them offer only two employee benefits on average.
“Companies are looking to increase take-home salaries without necessarily increasing the compensation by the same level,” said Anish Sarkar, chief executive of Pluxee India. “They want to address specific employee needs in a hybrid work environment or be seen as companies focused on health and wellness.”
He said, “Many companies, especially startups and those scaling up, are now restructuring to offer multiple benefits at once. This approach allows employees to get more value, which can increase their take-home pay without significantly raising costs.”
The most popular employee benefits extended by respondent organisations include meal cards (86%), leave travel allowance (54%) and fuel and driver salary (38%).
According to the study, one in every three employers finds the benefits management process to be complex and claim processing to be time-consuming.
This may well be because 43% of organisations still rely on paper-based processes in managing reimbursements, and of the 57% that manage benefits digitally, 70% do not have a mobile application. The study finds that each claim takes up to half an hour from an employee’s work schedule.
Sarkar said, “For companies, even though it may be inefficient or based on paper, it's kind of working for them. They may think, why fix something that is not broken? There is a bit of inertia and resistance to change.”
He said, “Companies are often close to implementing a new digital solution but pull back at the last minute, fearing it might disrupt the employee experience. The fear of short-term change sometimes outweighs the medium or long-term benefits.”
In turn, 57% of organisations take more than a week—five business days—to process claims, according to the study.
Bill-related complications pose a challenge to 42% of organisations in managing employee benefits. The study attributes this to bill quality-related issues and claim storage issues.
“A solution where employees can take a photo of the bill and submit it with one click on an app, with quick validation, can significantly improve the experience,” Sarkar said. “The key issues are compliance and the ease of bill submission and tracking. Simplifying these processes with technology can address the challenges effectively.”
If these employers optimised their benefits packages, employees could see an annual increase of about Rs 1 lakh in their take-home salaries, says the study shared exclusively with ET.
The study, based on an email survey sent to more than 16,000 executives working across the departments of human resources, finance and administration, elicited responses from 97 companies across sectors.
As per the income tax rules, a salaried employee is eligible for certain tax exemptions. Spending on specific purposes by individuals—performing official duties—allows them to avail of these tax exemptions.
The study also says that almost three in every four employers in the country feel their employees expect a higher in-hand salary but are unaware of tax-saving possibilities.
You Might Also Like:
The Pluxee study found that while 56% of decision-makers are aware that workers can increase their annual take-home salary through benefits, 45% of them offer only two employee benefits on average.
“Companies are looking to increase take-home salaries without necessarily increasing the compensation by the same level,” said Anish Sarkar, chief executive of Pluxee India. “They want to address specific employee needs in a hybrid work environment or be seen as companies focused on health and wellness.”
He said, “Many companies, especially startups and those scaling up, are now restructuring to offer multiple benefits at once. This approach allows employees to get more value, which can increase their take-home pay without significantly raising costs.”
The most popular employee benefits extended by respondent organisations include meal cards (86%), leave travel allowance (54%) and fuel and driver salary (38%).
You Might Also Like:
According to the study, one in every three employers finds the benefits management process to be complex and claim processing to be time-consuming.
This may well be because 43% of organisations still rely on paper-based processes in managing reimbursements, and of the 57% that manage benefits digitally, 70% do not have a mobile application. The study finds that each claim takes up to half an hour from an employee’s work schedule.
Sarkar said, “For companies, even though it may be inefficient or based on paper, it's kind of working for them. They may think, why fix something that is not broken? There is a bit of inertia and resistance to change.”
He said, “Companies are often close to implementing a new digital solution but pull back at the last minute, fearing it might disrupt the employee experience. The fear of short-term change sometimes outweighs the medium or long-term benefits.”
In turn, 57% of organisations take more than a week—five business days—to process claims, according to the study.
Bill-related complications pose a challenge to 42% of organisations in managing employee benefits. The study attributes this to bill quality-related issues and claim storage issues.
“A solution where employees can take a photo of the bill and submit it with one click on an app, with quick validation, can significantly improve the experience,” Sarkar said. “The key issues are compliance and the ease of bill submission and tracking. Simplifying these processes with technology can address the challenges effectively.”
( Originally published on Jul 01, 2024 )
Get Unlimited Access to The Economic Times
