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Budget Expectations: Fintech Sector Wants Lesser Tax, More Support; Check Details

The Union Budget 2022-23 will be presented in the Lok Sabha by finance minister Nirmala Sitharaman on February 1.

The Union Budget 2022-23 will be presented in the Lok Sabha by finance minister Nirmala Sitharaman on February 1.

Experts also 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 Expectations: The fintech sector in India has been gaining more relevance in amid the pandemic, emerging as the a driving sector of the country’s economy. As the Budget day nears, fintech companies in India are placing forth their expectations from the government. The firms expect newer reforms for themselves, including providing more support for NBFCs and reducing tax burdens. The sector, which has seen a rising digitisation over the past few year, is expecting new regulations in accordance with its evolution. As per experts, the government should cater to the need for a more focused approach towards sustaining the growth of fintechs and protecting customer confidence.

According to the Reserve bank of India, the fintech sector received investments worth $4.6 billion in 2021. This has almost tripled  when compared to the total investments received in 2020. NBFCs played a large role in this. Therefore, a boost for them is expected in Budget 2022.

“NBFCs are an important pillar of our country’s financial ecosystem. The fintech and NBFC sector has penetrated deeper rural markets, where banking services were a challenge," said Rohit Gajbhiye, founder and CEO of Financepeer while talking about the Union Budget 2022 expectations.

He said that NBFCs grew exponentially during a global crisis, thus facilitating millions to smartly manage their financial transactions. “This Union Budget should focus on further strengthening the NBFCs through incentives and investments, to give it the required push," said Gajbhiye.

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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.

Sharma also mooted for “budgetary concessions such as a GST waiver for digital transactions along with incentives, especially in semi-urban and rural areas which would further augment cashless payments."

Echoing his sentiments, Ram Shriram, founder of BharatATM said, “Exemptions on procurement of point of sale terminals, GST rates for rural banking agents remitting funds among households, and subsidies to compensate for merchant discount rate (MDR) waiver are among some of the measures industry executives are keeping an eye out for."

“This upcoming Union Budget is expected to bring newer reforms for fintech sectors and focus on lowering the GST rates for financial services, substantial tax breaks and other tax reforms," added Gajbhiye.

Shriram also said that a gentle taxation system should be adapted for those who do not prefer digital payments. “Our government should look at GST & 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," he said.

Divam Sharma on the other hand supported the setting up of a “dedicated fund to strengthen digital infrastructure for cooperative banks."

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first published:January 21, 2022, 16:51 IST