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Government as a facilitator

When carrot-stick approach doesn't work


STUCK Tax incentives for hiring PWDs haven't worked the way the government wanted

Greater inclusivity does not come from penalising erring employers. The government needs to play the role of a facilitator too.

The government has chosen to use a carrot-and-stick policy to make the private sector employ PWDs. Currently, incentives are available if 5 per cent or more of the workforce is differently abled. Here, the government makes payment of the employer's contributions to the Employees Provident Fund and Employees State Insurance for the first three years, subject to certain conditions. But red tapism and fear of government interference have put companies off from biting the bait.

Five years from the date of enactment of the Bill, every employer in the private sector (having a workforce of more than 20) has to ensure that 5 per cent of its workforce comprises of persons with benchmark disabilities. If this quota is exceeded, then a company can deduct from its taxable income an amount equal to the salary of the PWD employees in excess of the quota. If there is a shortfall, salary to the extent of the shortfall has to be added to the taxable income. Such deductions or additions will mean less or more tax payment.

Questions remain about the exact amount to be added or deducted. Further, some companies owing to tax incentives or losses may not be paying taxes and above all tax laws will also need to be amended. Many countries have prescribed for such quotas. Germany has a similar reservation policy, but penalties are clearly defined and not linked to the tax outcome. For instance, if less than 2 per cent of the quota is met the monthly penalty is euro 260 (Rs 18, 100 approximately).
"Simplicity and transparency through the use of an e-platform is vital for the success of such schemes, " asserts Meera Shenoy, Founder-CEO, Youth4Jobs.

Even though Lemon Tree Hotels has already met this quota, Patu Keswani, chairperson and MD feels the time frame of five years may not be enough for India Inc to make the transition. It requires a major shift in corporate culture and also the way a job and process is defined to enable a PWD employee to function effectively.

Incentives are a better option, say experts. "Penal provision adds to the cost of doing business and may not necessarily achieve the objective of increasing employment opportunities for PWDs. A one-size-fit-all approach cannot work. Grants may be useful for SMEs, but for larger companies the government may propose adjusting the amount spent on facilitating or providing facilities to PWDs against CSR expenditure (2 per cent of profit after tax is currently advocated as CSR budget ), " says Parul Soni, head of development advisory services at Ernst & Young.

The consensus is that the government needs to adopt a holistic and participative approach. Skill building courses and easy access public transport for PWDs could make a huge difference.

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