According to a recent survey by Borzo (formerly WeFast), a global same-day delivery company, a staggering 77.6% of independent delivery workers in India earn less than Rs 250,000 a year. The survey, which covered over 2,000 workers employed by companies like Zomato, Swiggy, Uber and Amazon across 40 cities, sheds light on the financial challenges faced by these workers and their levels of tax awareness.
“As we focus on the informal economy, it is important to equip delivery workers with knowledge and tools for effective financial planning. The debate around minimum income for delivery workers in this sector points to the need for targeted education and support,” says Eugene Panfilov, Managing Director, Borzo India.
The survey report titled ‘Understanding Financial Literacy of Job Delivery Partners’ took inputs from 2,000 workers from Tier I and II cities like Mumbai, Delhi, Bengaluru, Hyderabad, Jaipur, Ahmedabad, Kolkata, Chennai, Pune, Gurgaon, Noida, Lucknow, Indore, Chandigarh, Surat, Udaipur, Amritsar, Vadodara, Thane, Kanpur, Bhopal, Haridwar, Guwahati, Ghaziabad, Faridabad, Kanchipuram, Ludhiana and Tier 3 cities like Pimpri Chinchwad, Raebareli, Kalyan, Chapra, Palghar, Kashipur, Nashik, Jalandhar, Baghpat, Saharanpur, Mohali, Nadiad, Rohtak.
Self-employed workers and ITR
The survey revealed a lack of tax awareness among these workers. Nearly 61% of respondents admitted they were unaware of their tax brackets, while only 39% said they knew what their situation was. Despite this, only 33.5% of self-employed workers have filed income tax returns, leaving a huge 66.5% who have never done so.
Of those filing income tax returns, a significant majority (66%) file nil (Nil) returns, while 34% file self-assessment returns. The survey also noted that 47% of income tax filers pay their taxes in regular instalments, while 53% prefer a lump sum payment.
Are self-employed workers willing to pay taxes?
Interestingly, 42% of respondents who do not file ITR expressed their willingness to pay tax if they fall into a tax bracket, but a larger percentage, 58%, are not willing to pay tax even if they are supposed to.
What about investments?
The survey also explored the investment habits of delivery workers and found that most do not invest in financial instruments such as mutual funds or stocks. Specifically:
Mutual Funds:77% do not invest in mutual funds, and of the 23% who do, the majority (71%) invest between Rs 500 and Rs 1,000 per month.
Stocks:74% of self-employed people do not participate in the stock market. Among the 26% who do, almost half prefer blue-chip stocks, while others opt for IPOs or low-priced stocks.
Long-term savings
As far as long-term savings are concerned, only 24% of self-employed people invest in Public Provident Fund (PPF) accounts, suggesting that long-term financial planning is not a priority for most. Those who do invest in PPF typically contribute between Rs 1,000 and Rs 3,000 per month.
Life insurance?
The survey also revealed that 65% of self-employed workers do not have life insurance, indicating a lack of financial planning for unforeseen circumstances.
Niti Aayog estimates that India has 7 million freelancers and this number is expected to rise to 25 million by 2030, with an annual growth rate of nearly 12%.
How does this compare to national fiscal data?
The broader picture of tax compliance in India, as presented in Parliament for the fiscal year 2022-23, shows that of the 74 million people who filed income tax returns, around 70% reported zero tax incidence. This shows that only a small fraction, around 1.6% of the population, actually paid income tax during this period. While there has been an increase in income tax compliance between 2019-20 and 2022-23, the increase in people with zero tax incidence has outpaced this growth.
First published: August 23, 2024 | 7:30 pm IS
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