India’s economy is on the road to recovery after a few forgettable quarters of negative GDP growth hit by the COVID-19 pandemic. It is imperative that in addition to the usual expectations, many hope that this budget will provide a much-needed boost to the HR sector, including in the form of regulatory and tax easing, as well as spending increases to help the sector get back on track.
With the upcoming budget, the industry is planning improvements that will benefit the employees and employment process of every well-established business. In addition, the upcoming budget is expected to place a strong emphasis on job and skills development through the Digital India mission.
Tax breaks and other benefits related to employees
As we have observed, the major outbreak of COVID-19 at the start of 2020 has changed the working habits of all companies around the world. The new culture of working from home has emerged and has unquestionably increased the cost of an employee’s expenses. Previously overlooked bills, such as office supplies, all-day electricity, and internet bills, are now fully transferred to the employee’s wallet, increasing their overall expenses.
According to reports, employees should live longer”expenses related to working from home“, which means that the company must offer financing and allowances to meet the basic requirements, and this must be taken into account by income tax regulations.
Given the high medical costs that most employees have incurred in connection with COVID-19, the HR sector expects a tax cut in this area of concern. It also provides for an increase in deduction limits, such as Section 80D, covering medical insurance premiums paid, and various other improvements in the health insurance sector (as done by the IRDA). The focus will be on improving coverage and treating serious illnesses in a shorter waiting time.
Some tax experts are also urging the government to allow medical expense tax deductions for employees who have been impacted by COVID-19. It also provides an additional tax reduction of Rs 50,000 to Rs 100,000 for workers who work from home.
Speaking of the new programs, the Indian government has launched the Aatmanirbhar Rozgar Yojana, a new initiative. During the COVID-19 pandemic, the Aatmanirbhar Bharat Rozgar Yojana was introduced to encourage employers to increase employment while providing social security benefits and restoring lost jobs.
The sector awaits further additions to this initiative in which the government recognizes job creation as part of ‘merit service‘ so that the GST rates currently applicable on the segment can be reduced (down to 0%), thereby benefiting a wide range of stakeholders.
Skills development and increased job opportunities
Financial expenditure must increase to keep pace with technological advances and people’s ability to learn new skills. Artificial intelligence, machine learning, and data science are examples of new era technologies that have seen significant growth over the years and require stable funding to reach those in need.
It is also believed that the union’s budget will be more focused on the country’s economic recovery by focusing on areas that ensure a stable financial situation even in the face of a pandemic, such as employee welfare and employment development.
According to the India Skills Report 2021, Indian youth employability dropped by 45.9% in 2021 from 46.21% in 2020 and 47.38% in 2019 due to skills loss over the two previous years. This demonstrates the importance of working on the skills program in conjunction with the Digital India Mission, ultimately contributing to employment development.
A new Labor Code is expected, which will help strengthen business continuity and assist the MSME sector in job creation and skills development. It is expected that the new labor code will contribute to better management of relations and greater transparency between the parties (employer and workers), in particular by protecting the interests of contract workers and non-unionized workers.
However, the biggest challenge in a labor surplus economy like India would be to take care of the unorganized sector.
The country recently experienced a migrant worker crisis during the first wave of COVID-19. Therefore, an effort to consolidate existing labor laws (including the interests of the unorganized sector) through a comprehensive “Social Security Code” will be something the HR sector is eagerly awaiting.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)