Volume 1 Issue 5 - November 01, 2003

Meet on incentives for corporates to employ disabled people

DNIS News Network -- The cross-disability NGO, National Centre for Promotion of Employment for Disabled People (NCPEDP), conducted a 'preparatory meeting' to frame incentives for corporates to employ disabled people.

Picture of the think tank team

The meeting, apart from industry representatives, comprised NGOs, parents of disabled people and accounts professionals, who discussed and compared incentives given in other countries to encourage employment of disabled people in the private sector.

The meeting was chaired by Bibek Debroy, director of Rajiv Gandhi Institute for Contemporary Studies, and was attended by eminent people such as Manishankar Aiyer, Subodh Bhargava, former president of CII and executive trustee of NCPEDP, Jayant Bhuyan, secretary general of Assocham, Ashok Alaxander, director of Gates Foundation (India), Alana Officer, country director of Handicap International (India), Preeti Mehra, deputy editor of Hindu Businessline and G. Syamala, executive director of AADI. They discussed the formulation of a Draft Incentives Policy for the corporate sector, as mandated under Clause 41 of The Disability Act, 1995.

During the brainstorming session, it was suggested that two sets of recommendations should be created - short-term recommendations for the coming budget and long term incentives policy that could be followed in a step-by-step manner. The group also recommended to carry 1 per cent of the organisation's turnover into a Disability Cess.

Speaking on the occasion, Subodh Bhargava said, "All those companies who fail to employ disabled people will not be covered under the 1 per cent Disability Cess.
Moreover, if a company employs 1 to 2 per cent disabled people, it is eligible for an accelerated depreciation of about 150 per cent. Similarly, a company employing 2 to 3 per cent disabled employees can avail accelerated depreciation of 175 per cent on capital expenditure incurred. If the company employs more than 3 per cent disabled people, it gets 200 per cent depreciation on capital expenditure."

Capital expenditure would include all long-tem expenditures made by the organisation for making itself barrier-free.

Bhargava further added, "There should be substantial tax rebates up to 125 per cent on employee cost or weighted deduction, wherein the company employs 1 to 2 per cent of disabled people in its workforce, as is done for R&D expenditure as per the IT Act. If the company or organisation employs 2 to 3 per cent disabled people, rebate of up to 150 per cent should be given."

In weighted deductions, if the organisation employs a disabled person with a salary of Rs 1 lakh per annum, then the organisation gets a rebate of Rs 1.5 lakh, which means an additional rebate of Rs 50,000. With corporate tax liability being calculated at 35 per cent of Rs 50,000, the organisation actually makes a gain of Rs 17,500 on account of this.

It was suggested that about 10 per cent of rebate on Profit Before Tax (PBT) would be given to organisations that employ 1 to 2 per cent disabled employees, 15 per cent for employing 2 to 3 per cent disabled people, and 20 per cent rebate for employing more than 3 per cent employees with disability.

Incentives like cap on capital expenditure not exceeding Rs 10 lakh per disabled employee and a lucrative cap on corporate tax not exceeding Rs 1 crore was also suggested. Members indicated that various industry representative bodies like Assocham, CII and FICCI should be requested to include these recommendations in their separate budget recommendations for Finance Ministry.

While Alana Officer discussed incentives available in the European Union and how they could be best replicated in the Indian context, R.K. Gupta, from Bansal R Kumar & Associates, gave details on various subsidies and tax incentives already available in India in various vertical segments like export zones, rubber, sugar and steel industries, to name a few.

Javed Abidi, executive director of NCPEDP, pointed out that incentives are available to the private sector to encourage employment of disabled people even in neighbouring China and Pakistan, let alone the EU.

"By and large, there are different kinds of quotas applied in different countries. For example, if you have 100 employees or more in an organisation in Pakistan then there is 1 per cent reservation for disabled people," Abidi said. "In other countries there are very liberal incentives.

"I am told that there are over 8,000 enterprises in China, which employ disabled people and are getting suitable incentives. It is understood that about 60 to 70 per cent of the disabled Chinese are gainfully employed in some place or other," he added.

Talking about the dismal state of disability employment in India, he explained that only after The Disability Act, 1995, was formulated, the issue of reservation for disabled people in A and B category jobs in government and public sector was thought about. "Before that the government had a job incentives for disabled employees only in the C & D categories," he said.

He further focussed on the importance of Clause 41 of The Disability Act, 1995. It is the only clause in the entire Disability Act that mentions the private sector by name and encourages employment of disabled people to the tune of 5 per cent or more of the workforce.

G. Saikumar pointed out the importance of formulating incentives even for partnership firms and individual-driven organisations, apart from framing them only for big corporates.

"We should recommend provision of tax incentives not just for big organisations, but also partnership firms and individuals, so that the employ disabled people," he said.

For long-term recommendations, it was suggested that gradation of incentives should be applicable on the basis of gradation of disability, as otherwise the very word 'disability' would be misinterpreted and only people who are minimally disabled would get employment.

The members felt that incentive recommendations should also keep in mind the needs and aspirations of people with mental disabilities.

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