Tag: employer

Gen Z hardest hit professionally by the economic impact of Covid-19: Report

Banking & Finance

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Generation Z has been hardest hit professionally by the economic impact of the Covid-19 pandemic, according to a new study by the ADPRI research Institute, called ‘People at Work 2021: A Global Workforce View.’

The report is based on ADP’s survey of more than 32,000 adult workers across 17 countries.

As per the report, over 78 per cent of the 18–24 year-old cohort said that their professional lives have been affected by the pandemic.

Also read: Chipping off the old block

The survey also found two in five (39 per cent) had lost jobs, were furloughed, or suffered a temporary layoff from their employer. Whereas 28 percent of workers of all ages said the same.

Generation Z also indicated they were twice as likely to have been impacted by the pandemic compared to those aged over 55, the oldest age bracket where 19 per cent of respondents lost a job, been furloughed or were temporarily laid off with the same employer.

“This may explain the plunge in optimism of 10 percentage points (83 per cent) among them,” the report said.

In comparison, 29 per cent of professionals in the 25-34 age bracket, 25 per cent aged between 35-44 and 21 per cent of the 45-54 cohort said that they lost a job, been furloughed or were temporarily laid off with the same employer.

Gen Z to be professionally agile

Rahul Goyal, Managing Director of ADP India & Southeast Asia, said Generation Z has had to be the most professionally agile of any age group in the face of Covid-19.

“In India, more than half of young workers say they have taken up additional responsibility for fear of job loss during the pandemic,” said Goyal.

“Employees often define job security by the reach of their professional network and the ability to tap into relationships to find non-linear jobs that can extend a career. That’s exactly what Generation Z is doing: finding new ways to climb the ladder,” Goyal said.

The report also highlighted the impact the pandemic has had on employees’ attitudes toward the current world of work, their expectations of and what they hope for in the workplace of the future.

In India, 89 per cent of the Generation Z mentioned that they had to choose between work and well-being or family.

“They attributed working from home to blurring the boundaries of definitive working hours,” it said.

“The unfortunate reality of entering the workforce in a recession is large initial earnings losses. This triggers significant changes to local labour market structures that can take years to recover from. The more young people can be proactive, the better,” Goyal said.

“Covid-19 has been an emotional burden for the younger generation of workers in India, but they see themselves getting better and stronger through self-motivation, adaptability, and new personal skills. This could have long-term implications for the jobs people do and how they work in the future,” Goyal further added.

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How is Covid related financial relief granted by employer taxed?

Personal Finance

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It is vital to know the tax treatment for money received for treatment, ex-gratia to family in case of death of employees

The pandemic had created significant havoc in the lives of the people. Corporates, charities and well-wishers have shown compassion towards the affected people by contributing in various forms. However, this act of humanity has its uncertainty from an income-tax standpoint. The government was gracious enough to take cognizance of a few uncertainties and issued a press release dated June 25, 2021 to clarify the taxation standpoint on some accounts. These reliefs are subject to an amendment to the Income Tax Act, though. Against this backdrop, we have discussed few nuances concerning Covid relief and the press release of the government. The imaginary conversation between Yaksha and Yudhishthira explains some aspects.

Yaksha – Hi Yudhi, is the money received from an employer/others for medical treatment taxable?

Yudhishthira – Medical reimbursements provided by the employer for a prescribed ailment in an approved hospital will not be treated as a taxable perquisite. However, Covid-19 is not a prescribed ailment/disease to date under Rule 3A(2). Therefore, the reimbursement could be treated as a perquisite. To address this concern, a press release was issued to clarify that any amount received from an employer for medical treatment due to Covid-19 will not be subject to tax in the hands of employees. This relief mentioned in the press release does not differentiate between employees opting for the old or new taxation regimes.

For amounts received from anyone other than employers, Sec. 56(2)(x) (a.k.a “Gift Tax”) taxes the recipient if the aggregate amount exceeds ₹50,000 in a year (excludes receipts from prescribed relatives). Therefore, there was a question about what would happen if a person received money for medical expenses beyond the limit. Would it trigger taxation ? The press release has clarified that receipt for Covid-19 treatment will not be subject to tax.

Yaksha – Does the relief mentioned above include assistance in financial and non-financial forms?

Yudhishthira – The non-financial assistance from the corporates/charities include donating oxygen cylinders, ventilators, ICU Beds, testing kits, medicines, etc. The press release has addressed only financial aid by employers to employees or their family members and is silent on non-financial assistance.

Yaksha – Is the vaccination cost of the employer and their families also covered under medical treatment?

Yudhishthira – Sec.17(2)(iii) r.w. Rule 3A(2) refers only to reimbursement of medical treatment, and there is an apprehension that vaccination is only preventive care. Therefore, vaccination costs could be treated as perquisite. However, one can refer to Section 80D, wherein the deduction for health insurance premium is granted to preventive health check-ups up to a specific limit. We need to see what happens on this front.

Yaksha – Can you explain the taxability of gratuitous payment received by the deceased family from the employer or others?

Yudhishthira –Sec. 56(2)(x) is equally applicable in this situation. To relieve the grieving families, the press release has clarified that the exgratia paid by the employer to the deceased family is fully exempt. If the exgratia is received from a person other than an employer, the amount is exempt up to ₹10 lakh.

Yaksha – For which financial year(s), is the relief proposed for taxpayers?

Yudhishthira – The press release had mentioned relief for the Financial Year 2019-20 and subsequent years. The timeline for filing original/revised/belated return of income for the FY 2019-20 has already expired, and the taxpayers would have filed the return taking a specific position on the taxability of various assistances. For FY 2020-21, the return filing deadline is extended to December 31, therefore the press release could be relied on. Taxpayers are advised to maintain sufficient documentation to support the relief are received towards Covid-19 medical expenses.

Yudhishthira – Yaksha, the agony that the family and the employees felt on Covid-19 is unfathomable. The tax consequences, if any, will only add to such agony. The government somewhat addresses this aspect in the press release, as you say. But one has to wait for the actual amendment to see whether the above aspects are addressed in the law per se, right?

Yaksha – That’s right.

Mukesh Kumar is a partner at M2K Advisors

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Government gives hefty pension boost to bank employees, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: The government has announced changes to the pension scheme of public sector banks. For family members of employees, the ceiling on family pension has been lifted and, for current employees, the banks’ contribution to the scheme has been increased by 4 percentage points to 14% from earlier 10%.

“Earlier, the scheme had slabs of 15%, 20% and 30% of the pay that a pensioner drew at that point of time. It was capped subject to a maximum of Rs 9,284. That was a very paltry sum and finance minister Nirmala Sitharaman was concerned and wanted that to be revised so that family members of bank employees get a decent amount to survive and sustain,” said Debashish Panda, secretary in the department of financial services, at a press conference held by Sitharaman.

The second change is that the employer contribution to the New Pension Scheme (NPS) corpus has been enhanced to 14% of the pay from 10% earlier.

The changes are in continuation of the 11th bipartite settlement signed by banks with unions on wage revision last year. In addition to the wage revision, there was a proposal for enhancement in family pension and also the employer’s contribution under the NPS.

A statement issued by the government said that thousands of families of public sector banks will be benefited by the enhanced family pension scheme, while increase in employer contribution will provide increased financial security to the bank employees under the NPS.

Those employees who have been with banks before 2004 are eligible to a defined benefit pension scheme where the monthly payout is determined by a formula based on their last drawn wage. These employees will benefit from the increase in pension limits.

Employees who have joined after 2004 are part of the NPS where the employees and the banks contribute toward a retirement corpus. After retirement, the corpus must be used to buy an annuity from an insurance company that will provide monthly income. The extent of monthly income depends upon the size of the corpus and cost of annuity.

With the fall in interest rate, the returns through annuity schemes have been shrinking, resulting in a call for higher contribution. The insurance regulator is also working with the industry to develop an inflation-linked annuity scheme.



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