Budget 2022: What fintechs expect from Finance Minister

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Mumbai: India’s Finance Minister Nirmala Sitharaman will present the Union Budget 2022 -23 today in Parliament. Across industries and business segments including fintechs have come up with their different expectations.

Fintechs are expecting tax incentives on the use of PoS/Micro ATM devices, waiver on GST and TDS for financial inclusion services, exemption on returns from investments in peer-to-peer (P2P) lending along with detailed clarity for the crypto industry in India and more.

Mandar Agashe, VC and MD, Sarvatra Technologies
Since the country only has 5.2 million active POS machines, the budget should include tax incentives to encourage the use of PoS/Micro ATM devices, which are significantly more cost-effective and infrastructure-wise less demanding than ATMs.

Further, the sector would welcome a GST exemption for merchants who accept digital payments; this measure will encourage further digital adoption, particularly in semi-urban and rural markets, where digital payments are still scarce.

In the end, we would hope the budget put a special emphasis on advancing the country’s fintech ecosystem as fintechs can boost India’s economy to the position it deserves.

Anand Kumar Bajaj, Founder, MD and CEO, PayNearby
A positive impact was seen on digital payments due to benign taxation for self-service digital customers. To ensure the same benefits reach the less-savvy citizens, our government could waive GST and TDS for financial inclusion services at Business Correspondent (BC) outlets across India.

A GST and TDS waiver will help reduce the cost of offering seamless financial services and help high-end tech reach the technology-oblivious segment. We stand with the government’s intent of taking digitization to the last mile and passing the GST waiver benefit to ‌end-users as this will push for greater financial inclusion and a digital economy in the country.

Moreover, low-income citizens are mostly catered to by low-earning retailers who barely cross the value of taxable income, and hence, do not file IT returns to claim a refund of TDS. Thus, TDS is only a cost to them and not a refundable deduction because they do not know how to take a refund by filing returns.

We sincerely hope that TDS for income below ₹ 50,000 a year can be waived off. We are positive that this budget 2022 will consider the grim working condition of the BC network and make the needful regulatory changes to ensure the viability of a community that has been vital in driving the cause of financial inclusion and democratization of digital payments in the country.

Bhavin Patel, Co-founder and CEO, LenDenClub
Returns from investments in Peer-to-Peer (P2P) Lending could be exempted from tax under Section 80C of Income Tax law, or a different provision could be carved out to reduce tax rates such as tax exemption for gains below Rs 20,000. This will encourage people across geographies to invest in P2P lending, making funds accessible on multiple platforms. P2P lending plays a significant role in empowering small businesses in India. Tax benefits in P2P lending will magnify the growth of businesses when capital from P2P platforms is diverted to the sector.

Gaurav Dahake, Founder and CEO, Bitbns
From the upcoming union budget 2022, we expect clarity in terms of how crypto transactions will get regulated. There have been many discussions going around in the crypto space; however, no concrete output so far. As an exchange, we have been working on this along with the finance ministry, creating favourable regulations.

We have shared deeper insights and statistics that showcase the size of the industry, the scale, and the growth rate it offers. How critical it is to various vital pillars of the economy, including employment creation and how people have been interacting with different crypto products that would ultimately help grow the Indian economy.

Therefore, we expect detailed clarity on how crypto will be regulated in the upcoming budget 2022 and an introduction to a tax regime that would be more fruitful. 2021 was the most significant year in terms of how things shaped up for the crypto industry in India and as a crypto community. With a robust mechanism in place, 2022 would be the year of mainstream crypto adoption.

Sudhesh Chandrasekar, CFO – slice.
The NBFC sector has witnessed a liquidity crunch in the last few years. Therefore, boosting the liquidity flow to fintechs and smaller NBFCs focused on consumer credit would be key to reviving economic growth and putting the economy back on a double-digit growth rate trajectory. In a bid to ease lending, the government also could promote banks to specifically fund fintechs and smaller NBFCs which are furthering financial inclusion in the retail segment.

Another welcome move could be the extension of tax sops on MLDs which has the potential to increase the flow of capital to the fintech space. The government’s policies can also be helpful in promoting the flow of overseas capital by easing the requirements and thresholds for Indian debt instruments.

Similar to credit guarantee schemes for Micro and Small Enterprises (MSEs), I’m hoping the government would look at credit guarantee schemes for retail borrowers to boost retail demand.

Harshil Mathur, Co-founder and CEO – Razorpay
Now with an aim to aid further development of small businesses, the Union Budget 2022-23 could introduce additional startup-friendly policies and tax relaxations that enable spending on innovation, ease-of-doing-business and reduce compliance costs.

We’ve seen a substantial spike in the adoption of digital payments in the last year. I’m hoping that in the upcoming budget, the Government will think of alternatives to the Zero MDR policy, as that will help promote e-payments and drive significant digital adoption amongst businesses. Initiatives like these will also lead to new innovations in the payments infrastructure.

Secondly, the crisis is likely to leave long-lasting scars on our society and economies, including the SME sector where issues of high indebtedness are particularly salient. It would be desirable for the Government to increase contribution to the FFS funds for startups. Hassle-free loan disbursements, automation of tax and compliance, paper-less approvals, and incentives to adopt digital banking practices will also be welcome changes that can support the growth of MSMEs.

Lastly, we’ve seen numerous startups incentivise employees this past year with buying back ESOPs. Deferring tax payments when exercising the option, plus waiving off tax for some ESOP receipts will also be a laudable change in the new budget.

Will the Finance Minister meet all these expectations of fintechs? In just a few hours from now, whether these expectations are included in the Union Budget 2022 or not – will be known.

(Image credit -iStock)

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