Budget 2019: Key expectations of the Fintech industry from Budget

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Updated: January 31, 2019 2:28:34 PM

Starting with better access to credit to helping them reduce the cost of borrowing, these measures provided the sector with a positive outlook.

Budget income tax expectations, Budget tax changes, Budget 2019, budget speech, Fintech budget expectation, The sector now expects that the government in the 2019 Union Budget introduces measures to ease working capital blockages, with possible reductions in tax rates and reducing compliance burden.

In November last year, Prime Minister Narendra Modi announced a number of measures aimed at MSMEs. Starting with better access to credit to helping them reduce the cost of borrowing, these measures provided the sector with a positive outlook. The sector now expects that the government in the 2019 Union Budget introduces measures to ease working capital blockages, with possible reductions in tax rates and reducing compliance burden.

It is expected that the government considers reducing the GST rates in the upcoming budget. Experts suggest, considering the difficulties faced by SMEs in the country, in the Budget 2019, the government is expected to increase the sales threshold for compulsory GST registration from Rs 20 lakh to around Rs 50-75 lakh.

As on 1 January, the RBI’s decision to permit a one-time restructuring of MSME loans that have defaulted but are not non-performing was taken as a welcome move by the MSME sector. Says, Vivek Tiwari, CEO & MD, Satya MicroCapital, “The announcement last year regarding the launch of an online portal that can sanction loans up to Rs 1 crore within just 59 minutes came as a piece of good news to SMEs. We expect this facility to reach the wider ecosystem in 2019.” Additionally, it is also expected that the government allocates more money in the digital lending sector. This will boost credit access to the SME sector, and also introduce new policies to facilitate better access to formal lending for MSMEs.

This year, the industry expects to ease of MUDRA and SIDBI refinancing norms, along with relaxations in the eKYC-based lending limit, and creation of a superior demand ecosystem. Adds, Manish Khera- Founder & CEO, Happy, “All recent budget sessions have witnessed positive developments towards the Fintech industry, together aimed at building on the vision of Digital India. We believe that the government understands both the sector’s importance and the prevailing concerns and will be doing the needful this year.” Experts suggest making e-mandate adoption compulsory for the banks will also help in reducing the overall TAT (Turnaround Time) and be yet another positive move.

Industry experts believe, low level of financial inclusion within the country is a critical factor, which restricts the credit flow for both personal consumption as well as for financing entrepreneurial endeavors. Hence, it is expected that the government encourages the online P2P lending that has integrated the age-old concept of lending with the technology-driven marketplace and is bridging the credit gap that exists. To encourage lenders, the government should bring in special tax rebate to lenders who fund loan requirements of MSMEs. Says Rajat Gandhi, CEO & Founder, Faircent, “The Finance Minister should also consider to exempt investment in P2P lending from taxation, along with allowing defaults from loans to be considered as capital loss when filing returns. Also putting pressure on rates and easing the current liquidity crunch, this would increase investments by lenders in P2P lending unlocking supply side.

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