Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Tuesday, 28 March 2017

The Next Simplification : ARM ?



Most advanced countries have just  ONE TAX  for sale of GOODS and SERVICES


We will introduce our own GST ( Goods and Services Tax ) from 1st July , across entire country


GST will replace some 70 + different taxes currently in force , for different products / services and in different States


This will lead to :


·         Higher collection of tax

·         Increase in productivity

·         Reduction in litigation

·         Simplified administering…etc



To further improve “ Ease of Doing Business “ ( - and attract many more foreign companies to set up their Manufacturing / Marketing operations here ) , I suggest NDA government follow this up with , introduction of :



·         ARM ( Allowances and Reimbursements Merger )  Act



Most economically advanced countries just pay consolidated “ SALARY “ ! Nothing else !


As against this ( utter simplicity ) , we have , one or more of the following elements of PAY STRUCTURE , depending upon factors such as,

·         Geographical location

·         Industry-sector ( organized vs unorganized )

·         Public Vs Private



These elements are :


·         Basic Salary ( in a Scale of rising minimum annual increments )


·         Dearness Allowance – DA ( usually linked to CPI / WPI rise )


·         House Rent Allowance – HRA ( varies from city to city )


·         Transport Allowance / Conveyance Allowance / Petrol Reimbursement


·         Food Allowance ( Coupons ) / Lunch Allowance


·         Leave Travel Allowance


·         Medical Allowance / Reimbursement  / Insurance Premium Reimbursement


·         Telephone Reimbursement


·         Hardship Allowance / Hazardous Jobs Allowance



·         Entertainment Allowance  /  Club Membership Fees


·         Driver’s - Gardener’s  Salary Reimbursement / Servant Allowance


·         Double Machine Operation Allowance


·         Milk Allowance ( - it exists ! )


·         Temporary Posting Allowance


·         Children's Education Allowance



*   Outstation Allowance



*   Washing Allowance / Soft Furnishings Reimbursement


*   Shift Allowance ( if required to work in second shift )


*   Overtime Wages @ 250 % of normal wages


*   Compensatory Working Allowance



The list is by no means, exhaustive !



And do not overlook the “ Monetary Value “ of the following :


*   Casual Leave / Sick Leave / Accident Leave


*   Accumulation / Encashment of PL


*   Paid Holidays


*   Supply of Uniforms / Safety Shoes / Umbrellas etc


*   Providing of Creche ( for Employee's Children )


*   Maternity Leave of 26 weeks


*   Contribution to ESIS / EPF / Gratuity  … etc



And , if juggling all of these was not difficult enough , a news report in Times of India ( 29 March 2017 ) adds following further complications :


“ GST would be payable if there is supply of free goods or services to an employee exceeding the stipulated sum


If an employee avails of a company asset for personal use, it would trigger GST


Input tax credit will not be available on supply of various facilities to employees, including life and health insurance


 Gifts to staff worth up to Rs 50k will be GST-exempt

[ http://timesofindia.indiatimes.com/business/india-business/gifts-to-staff-worth-up-to-rs-50k-will-be-gst-exempt/articleshow/57881920.cms ]

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I hope harried HR Managers would support my suggestion to implement ARM ( - to the extent possible )


ARM would leave them with more time to attend to the tasks of Talent Acquisition / Training / Human Resource Development


What shape should the New Compensation Structure take ( after ARM ? )


This could be the subject matter for debates / essays / case-studies etc among students specializing in HR at Management Colleges


By offering to enrich their Professional lives , ARM makes them, a “ Party with Vested Interests “ !


PS :

Robots do not ask for ANY of these , nor form a UNION to submit a “ CHARTER OF DEMAND





29  March  2017


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