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Even as we prepare for the budget 2020, just a day away, here are some of the expectations from the fintech industry ahead of the big announcement.
On taxes
This year, we look forward to clearing and demarcated tax SOPS for fintech ventures and more support for NBFC servicing SMEs/MSMEs.
Not only will this lead to overall growth for fintech in terms of providing innovative solutions but also drive entrepreneurship in this space. The result will be the creation of more startups and therefore more job opportunities.
We also hope for stronger support from the government for consumer-facing fintech start-ups to attract more people to invest through them. Separate payment and fintech regulatory body with a startup mindset can be created for this purpose.
There is also a need to increase the tax exemption bracket for savings and other investment products to bring more people into the formal economy.
Tax relief must be provided to merchants accepting digital payments to increase its penetration in India and tax rebates must be allowed to merchants for this purpose.
This will help in addressing the issue of cash in the system and drive the nation towards a more transparent and cashless economy.
To drive more electronic/traceable and trackable transactions, there is a need for the government to continue incentivizing the merchants for accepting digital payments.
Another area where we hope to see some policies is with regard to the simplification of GST along with incentivization for fintech that service corporates with revision/reduction of GST as they provide essential services.
It would be good to have a fund backed by the central government to boost innovation and provide entrepreneurs in this domain with tangible overall benefits.
Compliance Parameters
There is a need to allow fintech to tap into e-KYC or video KYC. As of now, only regulated entities can do digital verification for customers by tapping into the Aadhaar database.
Fintech companies must rely on offline verification which is both resource and time-intensive. Allowing the fintech’s to follow the same route will make the customer onboarding process quicker and help them tap into the rural markets as well.
The government should also consider raising the monetary limit for instruments that mandate the processing of paperless e-KYC. This will be key to ensuring complete financial inclusion.
Other things to consider
Pan card should be made mandatory for all cash transactions above INR 10,000 and the government must consider allowing payments banks to merge with NBFCs to create new small banks.
Digitally tracking the expenses incurred by MSMEs that avail Mudra and other loans made available by the government should also be made mandatory.
We also look forward to some clarity on compensation for revenue losses due to the Zero MDR proposal. While the government intends to drive growth in digital payments, it has a crippling effect on the fintech ecosystem.
We would like some clarity from the finance ministry on how the government ensures that fintech’s are compensated for their revenue loss and how they plan to boost confidence among the companies working in this space.
Overall, we hope the budget will make bring in ease of doing business and provide more opportunities that can be converted into solutions to existing problems.