Nasscom urges Centre to reimburse 'paid leave' to employees during lockdown

Nasscom requested the FM to allow expenses incurred by companies in enabling Work from Home (WFH) for its employees as an eligible business expense

Indian IT BPM industry Nasscom has urged the Centre to reimburse the payroll cost of employees who were on "paid leave" on account of any coronavirus lockdown measures till March 31, 2021, among other concessions and facilities.

According to a memorandum, covering issues related to various ministries also, submitted to the Finance Minister Nirmala Sitharaman, Nasscom has also urged to exempt IT-ITeS establishments from payment of statutory bonus for FY 2020-2021 and allow cross utilisation of SEZ and STPI locations for Business continuation Planning (BCP) scenarios, news agency PTI reported.

The body requested the FM to allow expenses incurred by companies in enabling Work from Home (WFH) for its employees as an eligible business expense. Currently such expenses are classified as perquisites as a result of which employees are liable to pay tax.

"Reimbursing the payroll cost of employees that have been placed on "paid leave" on account of any Covid-19 related lockdown measures till March 31, 2021, the Nassom requested in the memorandum saying, "This will help ease the financial burden and will ensure no job losses.

The novel coronavirus pandemic has led to the disruption of several global value chains and the Indian IT- ITeS industry is an integral part of many of these. It has necessitated a sharp re-look at the future of the industry in the short to medium term, it said.

A former office-bearer of Nasscom said the US government last week announced USD 349 billion under the Paycheck Protection Program (PPP) to be given as "forgivable loan" to small businesses to pay their employees during the Covid-19 crisis and India can also do something in similar lines to small businesses.

"Our discussions with the industry indicate that the impact is expected to be particularly severe and is expected to be most visible in the current financial year i.e. 2020-21. The industry faces constraints in terms of ensuring business continuity through the course of pandemic, impacting its ability to function effectively," the IT body told Sitharaman.

Nasscom also requested the Finance Minister to reduce corporate Income Tax rate to 15 per cent from the existing 22 per cent for all companies for FY 2020-21 as the reduction will benefit the entire industry by easing the tax burden and enhance the financial space to meet other expenses, in this difficult year.

It also requested to slash the GST rate from 18 per cent to 5 per cent for sale of goods or provision of services relating to fiber connectivity, broadband, cellular data, cloud services, laptops and computers.

To ensure immediate cash flows for the entire industry, specially MSMEs, Nasscom asked the Centre to clear all outstanding dues from the government, central and State PSUs to vendors within 15 days and also defer payment of advance tax instalment for first quarter the current fiscal due on June 15, 2020.