This document proposes creating a national secondary employment portal and associated tax breaks. It would allow individuals to pay salaries to domestic help pre-tax, similar to primary employers. This aims to encourage employment generation at all levels by formalizing domestic work. It estimates a Rs. 10,000 crore tax loss but Rs. 1,00,000 crore gain by reducing cash transactions. Benefits include employment records, widened tax base, and safety checks. Challenges are continuing domestic help addiction and blurring profit vs lifestyle lines. Overall it intends to recognize domestic work's role and motivate joining the formal economy through tax breaks, banking access, and skills training links. Debate on the idea is sought from experts.
2. I am no Expert
• This is an idea from me, a non-expert in tax or
finance to invite a debate from taxation
experts and lawmakers on LinkedIn®
• After all,
“वादे वादे जायते तत्त्वबोध:” - महाभारतम्
“Through debate is born knowledge” - Mahabharata
3. The Big Picture
• Just like an employer (a primary employer)
pays salary pre-tax to an employee (primary
employee)…
• Anyone (a secondary employer) should be
able to pay salary pre-tax to his/her domestic
help
4. Logic
Primary Employer
• Paid salary cost is the “cost
to earn the profit” for a
business
• Today’s tax break
encourages to spread
wealth through generation
of employment
Secondary Employer
• Paid salary is “cost to earn
more profit/salary”
• Proposed tax break will put
employment generation at
par with savings in the
priority of salaried class
5. Motivation
• Encouragement to employment generation at
every level because
– India is an excess labour society
– The labour is increasing faster in number than
skills and
– India needs more employment providers
– Employment generation needs to go into Indian
middle class ethos for sustained economic growth
6. Examples of Domestic Help
Multi-employer jobs
• Upto Rs. 6000/- per month
per employer*
– A maid
– A cook
– A gardener
– A car cleaner
– A traditional masseuse to a
new born and the mother
– A dog walker
Single-employer jobs
• Upto Rs. 17,000/- pm per
employer*
– A driver
– A babysitter/nanny
– A watchman
*Ref. Babajobs.com
7. Implementation
• Create a nation wide, Aadhar based database
portal of secondary employers and domestic
help
• Link these accounts with banks
• Salary paid through this portal to secondary
workers should (only) be considered for a tax
break (I call it “80-emp” )
• Link this portal to national criminal database
for verification of domestic help
8. Impact on the Economy
Loss
• Direct loss of the order of Rs
10,000 crore from income
tax because of the waiver
(that is 5% of tax collection)
Gain
• Stoppage of the order of Rs
1,00,000 crore getting into
cash every year (that is 0.6%
of GDP)
• More money in the hands of
the middle class for spending
or saving
• More correct employment
statistics
• Widened tax payer base
• Unlike 80-C, no obligations or
burden on financial
institutions
9. Impact on the Society
(Pedantic) Disadvantages
• Continuation of the
addiction of domestic help
• Blurring of the line between
“employing for profit” and
“employing for lifestyle”
• Confusion of lifestyle with
enterprise
Advantages
• Discouragement to child labour,
illegal immigrants and crime
• Employment generation elevated
at the same value as saving
• Acknowledgement to the role of
domestic help
• Encouragement to good work
culture
• Help in framing labour laws for
domestic help in future
• Competitive advantage over
other countries supplying
domestic help
10. Impact on Secondary Employers
Negatives
• Non-salary class may
continue paying in cash
• Fear of future labour
friendly laws like gratuity,
maternity leave
• Chance of round tripping –
Some may force the
domestic help to receive
overstated salary and give
the cash back to save on tax
Positives
• Tangible, sizeable tax break
up to approx. Rs 1,20,000/-
per year
• Proper criminal background
check of the help
• Palpable reward for honestly
paying cashless
• Satisfaction of “being treated
at par with the businessmen”
• Acknowledgement of job
provision
11. Impact on Domestic Help
Negatives
• As of today (May 30, 2017)
the idea doesn’t have
enough motivation
• Fear of tax net (yes, some
domestic help make decent
amount of money)
Positives
• Ripe for better employment
situation
• Government backed
employment record (may be
of use even in the gulf
country employment)
• Meaningful access to
inclusive banking and
related reduction in
domestic abuse
12. Future Work
Secondary Employer
• Skill based profile
availability of domestic help
• Backup availability
programs
• (Have kept rating system
knowingly out)
Domestic Help
• More motivation to join
• Link to social security
benefits
• Link to skill enhancement
programs (like truck
driving/mechanic training
for a driver, horticulture
courses for a gardener,
culinary courses for a cook)
• (Have kept rating system
knowingly out)
13. In a nutshell
• Make a portal registering the domestic help
and its employers and enable salary payment
through it
• Provide 100% tax break on salary paid this
way
14. THANK YOU!
NOW, PLEASE DEBATE
“वादे वादे जायते तत्त्वबोध:” - महाभारतम ्
“Through debate is born knowledge” - Mahabharata
