- Date : 29/06/2018
- Read: 4 mins
Zeta Nielsen India survey says that 1 out of 4 employees is unaware of tax benefits on reimbursements. Do you know how to take advantage of these benefits?
Lack of awareness of the tax benefits they are eligible for and tedious claim procedures are the main reasons why employees opt out of claiming reimbursements. The Zeta Employee Benefits Study, conducted in partnership with Nielsen India, reveals that among the employees that let go of reimbursements, 56% do so for higher in-hand salary, thereby failing to take advantage of the full potential of the tax benefits offered to them.
According to the survey conducted among 194 corporates and 1233 employees across seven cities in India, the most popular tax benefits offered as part of CTC (cost-to-company) include medical, mobile phone usage, gadget, fuel, leave travel allowance (LTA), and meal and gift vouchers.
Related: Tax Benefits after Retirement
Easy way out
It is common practice for employees to not submit a claim just to avoid the hassle. Even in today’s digital age, a whopping 94% of companies still follow a time-consuming paper-based process to manage employee reimbursement. In an interesting contrast, the study shows that 90% of employees prefer a fully digital reimbursement process, whereas only 6% companies follow the same.
A majority (62%) of employees surveyed felt that a manual, paper-based process is very time-consuming. They would rather forego the money (and thereby, the tax benefits) than go to the trouble of submitting reimbursement claims. The survey found that an employee spends 23 minutes on average just to submit a single bill claim, and 41% of employees need to submit one form per claim. That amounts to wasting a lot of time – and paper.
Related: Gifts and Taxes: how much does it cost to make someone happy?
Findings from the survey:
- 56% of employees who opt out of reimbursements do so for higher in-hand salary
- 94% of companies follow complex paper-based reimbursement processes
- 23 minutes is the average time spent by an employee to submit a single bill claim
- 41% of employees need to submit one form per claim
- 90% of employees want a digital process; only 6% companies have a digital solution
- 82% of reimbursement claims need two or more approvals to complete the process
- 2 in 3 companies feel the time/cost spent on managing tax benefits exceed the actual benefit to employees
“The administration of employee benefits in India is lagging behind in many ways. The survey ratifies our belief that employees waste a lot of their productive time in mundane activities like storing bills and submitting paper-based claims,” says Ramki Gaddipati, CTO and co-founder, Zeta.
Related: How does insurance help you save tax?
The corporate angle
While companies are going digital and paperless in every other aspect of their business, why are claims still done in this old-school way? It is not as if paper-based claims don’t come with their own set of issues. Close to 47% companies admit that managing paper bills, especially illegible and invalid ones, is a big challenge. In fact, 71% of companies take eight days or more to process each claim, with some taking more than two weeks.
Two out of three companies surveyed feel the time and cost spent on managing tax benefits exceed any actual benefit to employees. Almost 81% of companies have a dedicated team in-house (with an average strength of six people) to manage reimbursements. Due to high running costs and logistics management, 35% of corporates say they have discontinued one or more reimbursement programmes.
Related: Tax deductibles you are entitled as a parent [Infographic]
“With India changing gears to become a more digitally-driven nation, the way we run our organisations also needs to change. Although we have several employee benefits in place, the lack of digitisation is an area of concern, given the fact that we have a young, tech-savvy workforce in the country. Most importantly, a digital transition will ensure faster processes, significant cost savings for companies, and transparent functioning,” says Bhavin Turakhia, CEO and co-founder, Zeta.
Related: Things you didn't know about tax savings [Infographic]
Time for change
The mindset that opting out of reimbursement claims for tax benefits leads to a higher in-hand salary needs to change. There is a need for a more mature approach towards savings. Additionally, it is also important to make the claims process easy and less cumbersome for employees while justifying the time and cost spent by companies towards administering these benefits.
Lack of awareness of the tax benefits they are eligible for and tedious claim procedures are the main reasons why employees opt out of claiming reimbursements. The Zeta Employee Benefits Study, conducted in partnership with Nielsen India, reveals that among the employees that let go of reimbursements, 56% do so for higher in-hand salary, thereby failing to take advantage of the full potential of the tax benefits offered to them.
According to the survey conducted among 194 corporates and 1233 employees across seven cities in India, the most popular tax benefits offered as part of CTC (cost-to-company) include medical, mobile phone usage, gadget, fuel, leave travel allowance (LTA), and meal and gift vouchers.
Related: Tax Benefits after Retirement
Easy way out
It is common practice for employees to not submit a claim just to avoid the hassle. Even in today’s digital age, a whopping 94% of companies still follow a time-consuming paper-based process to manage employee reimbursement. In an interesting contrast, the study shows that 90% of employees prefer a fully digital reimbursement process, whereas only 6% companies follow the same.
A majority (62%) of employees surveyed felt that a manual, paper-based process is very time-consuming. They would rather forego the money (and thereby, the tax benefits) than go to the trouble of submitting reimbursement claims. The survey found that an employee spends 23 minutes on average just to submit a single bill claim, and 41% of employees need to submit one form per claim. That amounts to wasting a lot of time – and paper.
Related: Gifts and Taxes: how much does it cost to make someone happy?
Findings from the survey:
- 56% of employees who opt out of reimbursements do so for higher in-hand salary
- 94% of companies follow complex paper-based reimbursement processes
- 23 minutes is the average time spent by an employee to submit a single bill claim
- 41% of employees need to submit one form per claim
- 90% of employees want a digital process; only 6% companies have a digital solution
- 82% of reimbursement claims need two or more approvals to complete the process
- 2 in 3 companies feel the time/cost spent on managing tax benefits exceed the actual benefit to employees
“The administration of employee benefits in India is lagging behind in many ways. The survey ratifies our belief that employees waste a lot of their productive time in mundane activities like storing bills and submitting paper-based claims,” says Ramki Gaddipati, CTO and co-founder, Zeta.
Related: How does insurance help you save tax?
The corporate angle
While companies are going digital and paperless in every other aspect of their business, why are claims still done in this old-school way? It is not as if paper-based claims don’t come with their own set of issues. Close to 47% companies admit that managing paper bills, especially illegible and invalid ones, is a big challenge. In fact, 71% of companies take eight days or more to process each claim, with some taking more than two weeks.
Two out of three companies surveyed feel the time and cost spent on managing tax benefits exceed any actual benefit to employees. Almost 81% of companies have a dedicated team in-house (with an average strength of six people) to manage reimbursements. Due to high running costs and logistics management, 35% of corporates say they have discontinued one or more reimbursement programmes.
Related: Tax deductibles you are entitled as a parent [Infographic]
“With India changing gears to become a more digitally-driven nation, the way we run our organisations also needs to change. Although we have several employee benefits in place, the lack of digitisation is an area of concern, given the fact that we have a young, tech-savvy workforce in the country. Most importantly, a digital transition will ensure faster processes, significant cost savings for companies, and transparent functioning,” says Bhavin Turakhia, CEO and co-founder, Zeta.
Related: Things you didn't know about tax savings [Infographic]
Time for change
The mindset that opting out of reimbursement claims for tax benefits leads to a higher in-hand salary needs to change. There is a need for a more mature approach towards savings. Additionally, it is also important to make the claims process easy and less cumbersome for employees while justifying the time and cost spent by companies towards administering these benefits.
