Tax planning is an intense process. Having an understanding of laws around flexible pay, saving documents that hold as proofs and finally, being lucky enough to work in a company which extends maximum tax-saving opportunities can seem overwhelming.
However, with the intervention of technology, we can surely ease out such systems and make this process painless.
Most salaried professionals miss out on making use of flexible pay components in tax savings. The amount of tax that employees can save using such options, is actually huge.
Tax-saving machineries such as meal vouchers, medical reimbursements, tax-free gifts and gadget purchase benefits, can essentially save up to Rs 30,000 a year if a person falls under a 30% tax bracket.
Here’s how tax savings per year will shape up in each of the following categories.
● Meal Vouchers – Rs 3,300 per month x 12 months - Rs 39,600 (5.5 days a week)
*Medical Reimbursements – Rs 15,000
*Gift Card – Rs 5,000
*Gadget Card – Rs 50,000
What’s the roadblock?
The popularity of tax-saving benefits is still in the shadows because of the lack of information on them. Moreover, the way they are offered to people is extremely complicated. It involves storing bills, filling forms, almost no tracking system, delays in bill verifications and more.
Even for the companies offering these benefits, managing and tracking such tedious systems is difficult. A simple tax-saving machinery like meal vouchers usually takes up a good number of days to reach all employees.
Moreover, there is expenditure on logistics and distribution. Employees too, often lose their vouchers and face issues with acceptance resulting in losing opportunity to save taxes. Medical reimbursements again present a complicated scenario.
The system involves employees to save bills and make claims through a full financial year. To avoid such tedious processes, many may not opt for this benefit, thereby bidding goodbye to tax saving on Rs 15,000 every year.
Small and medium-sized companies often avoid offering tax-free gifts, gadget purchase allowances, etc., because they simply do not have the resources to pull off such logistical exercises. It is always the employees who bear the brunt of this, ending up parting with money they should ideally be saving.
How can we change this?
Making tax claims simple and user-friendly for both employees and employers is the only way to resolve these issues. We can expect overwhelming changes, once such processes are restructured on a platform that is easy to use and manage.
Two pressing concerns in the current scenario are:
*The amount of paperwork involved in every step and
*Time-consuming manual exercises
It’s time to rethink tax saving on a digital platform. Electronic management of tax claims, verifications, money transfers and settlement of claims make tax saving 10x easier for users to avail and companies to manage.
A substantial increase in in-hand pay, without actually any change in salary figures, may mean a lot to some people. It can be their opportunity to indulge and live a little more. It’s time corporates work towards helping employees get what they rightfully deserve. A quick change in our tax claims system is inevitable and digital is our way to go.
(The writer is co-founder and CEO of tax optimiser startup Zeta)