The pandemic has witnessed one of the biggest start-up explosions in India with more and more start-ups joining the unicorn club. The sheer enthusiasm being brought by motivated young entrepreneurs is certainly to reckon with. To become a consistent star performer on the global stage, the Indian startup ecosystem needs to acquire and retain the best of talent.
But along with a plethora of growth opportunities, the current pandemic situation has also posed financial problems and new challenges in front of these unstoppable founders especially in attracting, retaining, and incentivising the impeccable talent pool. India’s young talent is very forward-looking and is desperately looking out for opportunities and exposure to a variety of roles, which start-ups of the new world order are offering in the most seamless manner.
Pre-owned car leasing policy is today trending in the HR lobbies of the start-up world and is fast catching pace as one of the most preferred ingredients of talent acquisition and retention strategies. There are reasons for pre-owned car leasing policy to stay for long in the start-up world that thrives to attract, retain and incentivize the new-age talent pool.
Hiring the right talent:
Start-ups with the entirely new growth story in these unprecedented times are still facing difficulty in hiring the right talent especially when large corporations are doing out incentives/allowances for the best of the talent pool available. It is difficult to match the compensation being offered in a large organization. However, cars as an incentive in CTC for a new joiner can bring tax benefits & personal mobility for employees. For start-ups, it’s the best way to retain & attract new talents at zero cost.
Not able to give a hike under revenue stress, pre-owned car leasing is a saviour:
The negative impact on business created by this pandemic put many start-up founders in that situation where they are not able to pay annual salary hikes to their employees. Introducing the Car Lease Policy allows the Employee to save a considerable amount of personal taxes thereby increasing the in-hand salary. In times of pandemic, wherein Salary hikes are not forthcoming, this is a completely cost-neutral way for the Start-up to increase in hand salary for the Employee. With the help of car leasing, employers can increase the in-hand salary of their employees by restructuring the salary which will provide mobility as well as money in-hand comfort.
New car lease vs Used car lease:
New car leasing companies are prevalent in the market, but they generally qualify or offer their services to blue-chip companies. New car policy has low adoption because it needs minimum locking of 3-5 years, which in today’s scenario is difficult to commit, hence very low penetration. Also, there is a high foreclosure penalty in case an employee is switching to a company that they don’t allow in retail. Used Car leasing companies are revolutionizing the car leasing approach by offering high-quality pre-owned cars with very flexible tenures starting from 6 months - 24 months. Also, even if an employee is switching the company, then he/she can continue using the car in a retail capacity. For employees already having a car can also convert their car into a lease car & start saving money.
No down payment is required
When an employee opts for a pre-owned car leasing policy, they don’t need to make any down payment to lease the car. Because employees don’t need to make any down payment, they can take it as a clear-cut saving and they may use this amount to make a fixed deposit and can earn a good interest rate.
Car lease policy provides huge Tax saving opportunities for employees & it’s cost-neutral for the start-ups. When an employee opts for a pre-owned car leasing policy instead of a bank loan, they get the benefit of saving tax. For example, if an employee has a current salary of Rs 1,25,000 month (annual 15 lakh) and he has his own car and the employee pay Rs 20,000 per month as car EMI and employee falls in 30 percent tax bracket then the employee clearly saves Rs 6,000 per month on tax (30 percent of Rs 20,000). Hence it is clear that car leasing is more beneficial to employees who fall under the higher tax bracket.
The author, Tarun Lawadia, is Founder and CEO at PumPumPum. The views expressed are personal
First Published: IST