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Budget 2022: Banking Sector Wants GST Relaxation, Tweaks in KYC Norms

Experts expected for incentives to the banking industry and exemptions on taxes during Budget 2022 that is supposed to be tabled on February 1

Experts expected for incentives to the banking industry and exemptions on taxes during Budget 2022 that is supposed to be tabled on February 1

Budget 2022: Apart from GST waivers and tax exemptions, experts also demanded KYC regulations and NPA standpoint during the Budget

Budget 2022 Expectations: Ahead of the Budget Day, expectations of different sectors from the government are coming into the light. The banking sector is no different. The sector has a host of demands from finance minister Nirmala Sitharaman, who will present the Union Budget 2022 on February 1, which is next week. From tax relaxations and added benefits, the banking sector wants the government to notice it during the Budget session this year.

Whether the government will listen to their demands will be clear on February 1 when Sitharaman presents the 256th Budget on February 1.

“With digital payments, Where the next focus should be on is on digital banking, many accounts opened under JAN DHAN YOJNA is not at all operational. On a macro-level, technology should help the government achieve the vision of transforming India into a digital economy,” said  Archana Elapavuluri, Founder of Pickright Technologies on Budget 2022.

“This change is necessary to improve the overall economic efficiency of the country by reducing the role of cash in economic transactions, and ensuring people have access to better financial services and credit,” she added.

Ram Shriram, founder of BharatATM said that the waiver of GST and TDS on financial services through business correspondents during Union Budget 2022 will offer seamless services.

“The growth in the digital payments sector and its adoption is the result of gentle taxation for self-serviced digital customers,” he said.

“To ensure that the same benefits reach the less tech-savvy citizens, our government should look at GST and TDS relaxation for the financial inclusion services offered through the Business Correspondent (BC) outlets across India. Waver of the GST and TDS will help the industry to reduce the cost of offering seamless financial services.” added Shriram.

Experts also expected for incentives to the banking industry and exemptions on taxes. “Incentives to the banking industry include reimbursement of certain costs or tax subsidies in the form of weighted deductions or 100 per cent depreciation,” said Divam Sharma, founder at Green Portfolio, which is a SEBI registered portfolio management service provider.

Recently, The Reserve Bank of India (RBI) set up an internal fintech department to focus on the dynamically changing financial landscape in the country.

Apart from GST waivers and tax exemptions, experts also demanded KYC regulations and NPA standpoint during the Budget, which could help in mitigating risks in the banking sector.

“The regulatory framework and implementation of electronic and video KYC onboarding of customers should be emphasized to drive efficiency. Technology advancement must further substantiate this to create a CKYCR (Central KYC registry), a repository of customer KYC information,” said Deepak Bhawnani, founder and CEO of Alea Consulting.

“The National Asset Reconstruction Co (NARCL) and the India Debt Resolution Company Ltd (IDRCL), should certainly be launched in conjunction with the soon to be announced union budget 2022-23 to facilitate efforts in mitigating risk,” he added. While the support lent by the government has improved the sectoral situation, banking players cannot afford to ignore the risks that still exist, Bhawani said.

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first published:January 27, 2022, 19:07 IST