Yes, employees like going digital. 90% of the employees prefer digital processes for tax saving reimbursements, as it helps them save time as well as simplifies the process for submission of claim reimbursement.
A recent Zeta Employee Benefits study commissioned to Nielsen India revealed this and many more interesting facts about the way reimbursement claims are managed by India Inc. Reimbursement claims are those that help employees save tax such as meal vouchers, fuel and mobile usage etc. used towards work. With a sample size of 1233 employees across 194 companies in the manufacturing and service sector, the survey presented insights on the way the companies are using employee tax benefits programmes for tax saving its acceptability.
Key Takeaways from the Survey
Here are the major findings and my key takeaways for the survey:
- 94% of the Companies are still using paper based processes for managing reimbursements – My preference goes with the rest 6%. Using digital processes can help companies save significantly on the logistics of storing documents physically and also the effort of retrieving physical records at a later stage.
- 71% companies take 8 days or more to process reimbursement claims – Higher time taken for processing reimbursements pushes employees to opt out of the tax-friendly benefits, even though it may help them save on tax in a year.
- 2 in every three companies believe that time & cost spent for such processes outweigh employee benefits – To administer these benefits, several companies tend to have large in-house team to manage the process. Large team sizes, logistics costs and other overheads, all amount to a corporate spending more than the actual value of the benefit.
- 62% of the employees claim the process to be time-consuming. Average time taken by an employee to submit a single claim has come out to be as 23 minutes – When time is money, the longer time for submission and processing of claims is definitely a dampener and a huge opportunity loss for the company, given this eats into employee’s productive time.
As a Chartered Accountant myself, I have seen several salaried employees with higher tax outgo than what should ideally be. This tax outgo can be lowered by opting in for tax-efficient pay structures as part of the CTC.
As the survey pointed out, large number of companies rely on manual processes which has been cost-accretive for the companies and at the same time, too complex and time consuming for the employees. The processing time taken by the companies also delays the ultimate reimbursement credit to employees. These manual processes act as a deterrent to introducing new tax benefits. As the companies go digital, they can process claims faster through automatic data entry and easier retrieval of supporting vouchers. Moreso, the process becomes easier for employees and they are able to take maximum advantage of the benefits offered to them.
Given the key findings, it is certainly an alarm bell for the Corporates to rejig their processes and focus on going digital as being preferred by the employees. The revelations of the survey about the time taken by the employees to submit a single claim have indeed been surprising. For an employee to spend over twenty minutes only to submit a reimbursement claim is a criminal waste of employee productive time. Hence having a digital solution that is simple to use and reduces complexity is the need of the hour.
Introducing digital ways to manage tax saving reimbursements is indeed a win-win for employers as well as employees. It will not only ease up administrative hassles but also make the benefit more valuable to employees, and help employees save more in taxes. More savings would result in more higher take home salaries and possibly employee motivation.