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About 43 percent of SMEs discontinued at least 1 employee benefit due to high costs

The study, commissioned to Nielsen India, covered 194 corporates and 1,233 employees across seven key cities in the country, taking a comprehensive look into the current state of employee tax benefits across industries, including SMEs.


PTI Last Updated at 02 Aug 2018, 19:08 IST India

About 43 percent of small and medium-sized enterprises (SMEs) have discontinued at least one employee benefit over the years due to high costs, according to a study.

Two out of every three SMEs in the country felt that the cost of running an employee benefits programme such as reimbursements for fuel, phone bills among others outweighs the actual value of the benefit, said the Zeta 'Employee Benefits' study.

The study, commissioned to Nielsen India, covered 194 corporates and 1,233 employees across seven key cities in the country, taking a comprehensive look into the current state of employee tax benefits across industries, including SMEs.

Around 82 percent of SMEs have a dedicated in-house team to manage tax benefits or reimbursements and the average size for this team is around five members, it said.

Despite having a dedicated team, 43 percent SMEs have discontinued at least one or more of these benefits citing high running costs, it added. This figure is higher for SMEs compared to large and medium-sized companies with employee size upwards of 500.

The report showed that 61 percent of employees do not opt for these benefits because they find the process of claim submission time-consuming given that the average time taken by employees to fill a single claim is 24 minutes.

Moreover, it found that one in every two employees prefers to opt out of these benefits for a perceived higher in-hand salary. About 91 percent SMEs continued to depend fully or partially on a paper-based process when it came to processing reimbursement for employees, it said.

The process typically required employees to fill in claim forms either physically or digitally and submit these along with paper bills as proofs of spends for the said benefit.

Most SMEs claimed to be struggling with paperwork, with 46 percent citing invalid or illegible bills submitted as the largest concern while handling reimbursements, followed by problems like bill verification (18 percent) and bill storage (14 percent).

Zeta chief executive officer and co-founder Bhavin Turakhia said the SME sector continues to struggle in areas of digitization, innovation, and hiring and retaining the right talent in spite of witnessing tremendous growth over the past few years. "We have found that only 9 percent SMEs use the digital process to handle reimbursements," he added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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