The new tax slabs for taxpayers forgoing all existing deductions and exemptions in Budget 2020-21 is not considered beneficial for employees in a survey by HR specialist Mercer.
Survey participants included HR and Finance professionals from 119 companies, 81% of them felt the optional tax regime will not benefit them.
As many as 60% of respondents feel that those within the income bracket of Rs 5-10 lakh and Rs 10-25 lakh will be impacted by the new tax regime. "A higher 80% of responding employers think that the new tax regime will adversely affect the retirement savings behavior of their employees," the survey released on Tuesday said.
The study stated that 83% of respondents feel that less than 30% of their employees will opt for the new tax regime. They also feel it will be a challenge for their HR systems to handle a dual tax regime, which also increases the compliance cost.
Moreover, 80% plus employers think that the changes in section 17(2), under which employer contribution towards superannuation, national pension scheme and provident fund above Rs 7,50,000 will be taxable in the hands of the employee, will negatively impact their investments.