In a line with Prime Minister Narendra Modi’s commitment to create more jobs in the country, the government is considering a broad range of incentives for employers who create additional jobs. The Narendra Modi government is reportedly contemplating a plan to offer 30 percent exemption in income tax for companies that create additional jobs. To avail the benefit, the companies have to increase their headcount by 2 percent.
The labour ministry has proposed various fiscal and monetary interventions as part of the government’s employment-generation strategy and this is likely to find its way in the budget. The idea is to extend the scope of such benefits to all assesses and not just restrict it to manufacturers of a certain size.
The proposal was one of the fiscal and monetary incentives to the employers suggested by a high-level panel of secretaries for inclusion in the upcoming budget. While the proposal covers all types of jobs, total emoluments will be taken into account in giving tax exemption. The other proposed incentives include 125 percent rebate on provident fund contributions for employers and offering easy, cheap credit through interest subvention.
Currently, India has a total workforce of 480 million, with 6 percent of them employed in the formal sector and the remaining in the informal one. The country sees an addition of 12 million jobs every year.