IT industry body National Association of Software and Services Companies (Nasscom) has written to the government, asking for measures to support its member entities with the pandemic looking set to impact the industry in the near term.
Nasscom has asked for the abolition of OSPs (other service providers) under the Department of Telecom, under which certain kinds of work (such as voice calls) cannot be shifted to employees’ homes. This will enable a longer term work-from-home (WFH) scenario, which several firms like Tata Consultancy Services have already spoken about.
While the industry has received an extension in relaxation of OSP norms until July 31, these have to be abolished altogether if WFH is to become a new normal. Keshav Murugesh, CEO of WNS Global Services, said: “Nasscom is already working with the government to leverage this crisis and create new models of engagement, including changing labour laws.”
The complexities in asking for changes to labour laws will arise once it requires tinkering with aspects that fall under states’ jurisdiction.
The key assumption in labour laws is that workers go to a physical workplace located in a given state. “Labour laws are on the concurrent list of the Constitution, and hence regulatory requirements differ from state to state. For example, professional tax is a state subject. If I am an employer in Pune and my employees are working from home in Lucknow, Chennai and Indore, then would I have to get a professional tax registration and pay the same in all four states?” said Rishi Agrawal, co-founder and CEO of Avantis Regtech (a TeamLease firm).
He added that of 18 states having a professional tax requirement, 16 allow filing of tax electronically, while Gujarat and Tamil Nadu have a manual process. This means that to file professional tax for employees working in different districts of these two states, a company potentially has to ask a consultant to file taxes manually in each district. Similarly, Labour Welfare Fund and minimum wages are state subjects.
Extending SEZ, tax norms
Extending the Special Economic Zones policy has been a key ask of Nasscom since last year, with the sunset clause expired in March 2020. The industry has received a few months’ extension, but has asked for further extension of five years. At present, IT firms based in SEZs are mandated to collect their payment in foreign exchange for delivery of services to domestic tariff-based customers.
“This has impacted software service providers, which, despite meeting the net foreign exchange conditions, have been subject to this limitation. This has also resulted in artificial demand for foreign exchange. The relaxation in the foreign exchange requirement for services rendered in DTA will enable SEZ units to make use of excess capacity and reduce waste of national foreign reserves, eventually leading to faster recovery of the business,” Nasscom said in its submission to the government.