Skip to main content

Staffing industry seeks resolution of tax woes in Budget

By
Wants TDS to be cut from 10% to 2%, and applied on commission earned, not on gross invoice value
The staffing industry, representing companies such as Team Lease and Quess, wants finance minister Arun Jaitley to resolve the tax anomalies it faces, in the upcoming Budget.
The Indian Staffing Federation says that its demand assumes significance since post-demonetisation it is the formal sector which will grow and the staffing industry will play a crucial role in that.
The industry represents contract hiring in organised industry done through tri-partite agreements -- between the company that is hiring, the person hired and the staffing industry.
The Federation said tax deducted at source (TDS) is imposed on the gross invoices received by its members from its client companies, whereas it should be on just the commission received by the staffing companies.
While this amount is adjusted later, it takes about a year to happen, creating cash flow problems for staffing companies, says Suchita Dutta, executive director of the Federation.
At the same time, the Federation said its members topped the list of India staffing firms, as per the recent report published by Staffing Industry Analysts. The report indicated that the Indian staffing industry was estimated to be worth Rs 27,000 crore in 2015 and is forecast to grow by 12 per cent in 2016 and 10 per cent in 2017.
When asked when there is cash flow problems, how come the industry is performing so well, Dutta said the results are based on top lines and not bottom lines.

Besides, the Federation demanded that TDS be lowered to two per cent against 10 per cent imposed currently. The services industry draws 10 per cent TDS, while manpower industry is imposed two per cent tax, she said. However, contract workers have not been mentioned in the manpower industry, forcing industry players to deduct 10 per cent TDS, Dutta said.

The Federation also demanded separate regulations for the contract industry. Currently, they have to run around to seek separate licenses for their agreement with companies based on specific areas. For instance, explained Dutta, Wipro has six offices in Delhi and for each, the IT company and the staffing firm will have to seek separate licenses from the area licensing officer.

So far as the impact of demonetisation on the staffing industry is concerned, she said one thing that is clearly evident is that it is going affect the workforce in a positive way. Demonetisation will propel some desirable changes, such as bringing the informal workers into the fold of formal workforce.

Today, 94 per cent of India's workforce is in the informal sector, and its income does not even get properly accounted. In the medium to long term, employers engaging casual workers will be compelled to make payments to them only through banking or other formal modes. And this effect could become visible in sectors like real estate, construction and infrastructure, where a lot of work currently gets done in cash, Dutta said. Though formalisation is set to increase post demonetisation, the government needs to look at ways to efficiently manage formal workers, ensuring social benefits and encouraging staffing players to operate in formal sector, she said
Business Standard New Delhi,31st January 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

By
  Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...
Post a Comment
Read more