Come the end of the banking year, and your thoughts about-face to tax savings. Historically, and alone sometimes with reason, advisers accept captivated the appearance that their administration about-face a dark eye to accessible agency to accurately abate the tax accountability for the salaried worker, appropriately acceptable take-home pay. But that is changing, with new-age Internet companies appliance technology and their banking abilities to advice administration abate the accountability and accomplishment complex in alms tax accumulation measures for employees.
According to the assets tax (I-T) department, there are about 26 assorted allowances alignment from conveyance allowance, carriage allowance, compatible allowance, medical to ball or aliment costs provided by the employer that are exempted from tax.
Figures from the administration acquaint us that the boilerplate bacon of a tax-paying salaried Indian stands at about 500,000 per annum and an estimated ten lakh of the four crore salaried professionals in the country account from such tax-saving schemes.
However, deterrents that angle in the way of administration rolling out these schemes accommodate annoying cardboard work, bound and acrimonious authoritative frameworks complex in filing claims and processing reimbursements for both administration and employees.
To advice companies affected these hurdles, new-age entrepreneurs are adopting technology to access banknote flows to the wallets of the salaried articulation in the country. The banking technology (FinTech) firms that action a agenda aisle to agent account schemes accommodate Bengaluru-based start-ups Zeta, NiYO and Udio, amid others. These companies affirmation that they can access the take-home bacon by up to 10 per cent alike as they accommodate authoritative acquiescence and customised solutions to corporates.
An appraisal suggests that an up to 10 per cent access in take-home for every salaried being would beggarly an added disposable assets of about Rs. 25,000 crore for the abridgement – agency added spending, extenuative or investing. The addressable befalling for FinTech companies is aing to the 30 actor salaried advisers in India who are acceptable for these tax benefits.
‘No acceleration in CTC’
Zeta, founded by Bhavin Turakhia, entered the agent tax account and rewards amplitude aboriginal this year. The aggregation promises its audience that it can advice access agent take-home salaries after accretion the absolute bulk to company.
Currently, it offers eight allowances through its agenda band-aid such as ammunition & travel, communications, books and periodicals, meal vouchers, medical reimbursements, apparatus cards and allowance cards. Meanwhile, NiYo offers allowances such as meal allowance, allowance allowance, reimbursements for medicine, mobile, and ammunition bills.
As per guidelines, an agent can get meal vouchers up to a bulk of 24,000, medical agreement up to 15,000, 5000 as allowance vouchers and up to 50,000 as accessories and assets allowance based on the salary, of which 30 per cent of the bulk can be tax exempted in anniversary element.
“Zeta’s cloud-based band-aid enables companies to accelerate grants to advisers instantly through a agenda dashboard. A accumulated can calmly cycle out our solutions through which a salaried being can access their take-home bacon by Rs.80,000 per annum,” said Zeta Co-founder and Ramki Gaddipati said.
For example, one of the non-taxable allowances accustomed to advisers is the aliment voucher. Most organisations accommodate tax-saving aliment coupons in cardboard format, such as Sodexo passes that can be acclimated at assorted eateries and stores.
According to law, aliment in the appointment bounds or through basic paid vouchers accessible alone at bistro joints provided by an employer is not taxable, if the bulk to the employer is 50 per meal.
At present, advisers charge to administer advertisement in album anatomy printed in altered denominations. While appliance them, advisers charge to analysis for a church which could be cumbersome. Similarly, for the employer, there is a lot of paperwork and acumen involved, incurring added accomplishment or cost.
“Providing advisers best allowances is the aim of all corporates. However, with accumulated accepting advisers beyond the country it is actual difficult to administer being in a cardboard and pen archetypal as it may account misses or accident of bills. Appliance these articles helps us actual much,” said Anita Tiwari- GM- Rewards and Mobility, Telenor.
Guidelines a catalyst
The contempo action guidelines on Issuance and Operation of Pre-paid Acquittal issued by the Reserve Bank of India is a above addition that could ammunition the advance agenda agency of agent account payments.
Pre-paid acquittal instruments facilitate the acquirement of appurtenances and services, including funds transfer, adjoin the bulk stored in such instruments. There are three categories here: closed, semi-closed and accessible arrangement acquittal instruments.
As per RBI guidelines, all semi-closed acquittal instruments can be acclimated alone in cyberbanking format. As these cards are advised as prepaid instruments, start-ups accept partnered with banks to accommodate co-branded solutions to the customers.
“All bodies authorised/approved to affair pre-paid acquittal instruments are acceptable to co-brand such instruments with the name or logos of banking institutions,” declared a annular issued by the RBI in July this year.
This move by the RBI has prompted abounding new-generation lenders such as RBL Bank and YES Bank to accompany easily with these companies. Zeta has partnered with RBL to action MasterCard powered Zeta Super Agenda while NiYo has partnered with YES Bank to accommodate YES BANKNiYO Allowances Cards.
“The affiliation with a start-up in this articulation helps us to actualize added bulk for our customers,” said Ritesh Pai, Senior President & Country Head, Agenda Banking, YES Bank. “We are now able to array (these solutions) as allotment of our accumulated offerings to our customers. We were defective such a allotment in our solutions and it is a action for high-level assurance with corporates,” Mr. Pai said.
How it works
Digital platforms accommodate a adaptable application, a wallet and a agenda agenda which is pre-loaded with either agent amount or benefits, reimbursements, incentives or any added chic of absorb for which he or she is eligible. These cards can be acclimated at all Visa, MasterCard & Rupay merchants and can be acclimated online or at the point of sales. The money stored in wallets can be acclimated for advantageous autorickshaw fares, too area possible.
Another advantage of these apps is that they accept the adequacy to attach copies of bills through the adaptable and additionally acquiesce for agenda accumulator of bills and receipts on the cloud. Apps like NiYo and Zeta can be acclimated to clue absorb of the employees.
The adaptable app allows advisers to analysis all agenda affairs as able-bodied as analysis balances in real-time. At the back-end, the NiYO app seamlessly integrates with absolute HR administration systems of companies allowance them clue all allowances and affirmation reimbursements after resorting to paper.
“The new tax and agent account apps advice us to accommodate added allowances in a acceptable manner,” said Ishrat Sharqi- HR Geo Partner, India & SAARC, Autodesk.
NiYo, launched in July 2016 as a pilot in Bangalore, has bagged added than 10,000 end-user customers, while Zeta additionally has apparent a abundant advance in numbers of alive users with added than 70,000 bodies in its fold.
Fintech, currently a hot destination for investors, is acceptable to get added allotment with such the actualization of added start-ups to advice break long-pending problems of the salaried chic in India. A address from analyst close Tracxn that advance start-up allotment said that in the year 2016, 86 fintech companies had accustomed allotment account $484 actor in 97 rounds.
Mr. Turakhia is planning to advance $25 actor in FY 2018 to strengthen Zeta, while Prime Venture Partners had invested $1 actor in NiYO Solutions. Transerv, which offers Udio wallets, had additionally aloft $15 actor in Series C allotment led by IDFC Spice Fund, Micromax Informatics and added investors.
Cashless acceptable driver
Apart from all these factors, the contempo drive appear digitising payments on the aback of the government’s contempo demonetisation exercise is is acceptable to drive the use of cards and wallets. Also, with the added assimilation of the PoS and agenda architecture payments in abate places the use of such account cards will attestant growth.
With cashless affairs accepting momentum, the aegis of affairs would be a amount of affair and there could be added aegis breaches. Aegis consultants said that fintech firms charge booty able accomplish to barrier this. Aegis appearance such as geo-tagging and a PIN for acceptance payments, e-KYC analysis based on Aadhaar and the Unified Payments Interface launched by the National Payments Corporation of India, could added drive large-volume, defended transactions.
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