E-assessment can spell change for employee benefits

In December last year, weeks before the 2018 Union Budget of India was presented in Parliament, the Central Board of Direct Taxes (CBDT) formed a 9-member committee and put them on an important task that may transform the view of the income tax landscape.  

The CBDT was tasked with a project - to provide a road map for the Government of India to roll out an e-assessment procedure for all income taxpayers in the country this year. It's an ambitious plan to say the least, and the CBDT has a good track record as policy advisor board.

From an administration point of view, a nation-wide transformation of this proportion is going to take some doing.  Since all assessee submissions will have to be done electronically, and e-proceedings will takeover the conventional method, there will be a rapid reshuffle of IT manpower in order to deploy them in their new roles.

The proverbial taxman is going to be "nameless and faceless". This move should make the process a lot more transparent and it will also discourage corruption. This is indeed a tipping point, and its effects will be seen more so in the long run. If you expect citizens nationwide to pay their taxes promptly, then it's as important to remove obstacles in the way, and make it easier for them to do so. 

A similar view can also be taken of the denizens of corporate India as well. A large part of this workforce has been accustomed to e-filing their taxes so this may not change much for them, prima facie.

But there are other causal forces leading to effects yet not fully addressed in the system. Take the introduction of standard deduction in lieu of medical reimbursements and travel allowances.

Was the government's main aim to reduce paperwork? Sure, that will no doubt be achieved with this new format up to a certain extent. But to think that employees will celebrate this new change is a bit premature.

Whatever benefit the standard deduction brought was almost offset by the other announcement: 1% increase in education cess. It was a matter of time before people caught up to mathematics. Taxpayers in the 30% bracket will end up paying more than the saving from standard deduction, while those in the 20% bracket save a negligible amount. Of course, none of us must undervalue the benefit to the nation the cess does.

Every company out there will now offer their employees the standard deduction because they're mandated to.

Companies must ask themselves what more they are willing to provide to make up the difference. There are other tax benefits, and there are better, newer ways to provide them. These are readily available, and at most they will help retain employees, and at least they will save companies time, effort and a digitised way of administration, which will work hand in glove with the new E-assessment and E-proceedings structure.  What digitisation offers isn't just a technological prowess.

The end results have less to do with technological marvel, and have more to do with a consumer-centric design and approach. If going electronic with E-assessment is a ploy to make the revenue system more transparent, honest and accountable, then it's already clear the actual benefit we look to derive from such approaches is an emotional value that's very clear to see and to even measure.    

E-assessment will do more for the economy. It's also time for companies to do more for their employees; the tax-paying engine of the country.

They can do this easily through adding, not taking away tax-saving benefits from them. Ultimately, saving on tax is also paying tax on time. They are both opposite sides of the same coin. Having a efficient, honest tax system is what the new changes are all about, and employees play a critical role in this. Having a digital tax benefits solution to complement electronic tax submissions should be a goal for any well-informed business setup.  

(The writer is  CTO and Co-founder of Zeta)