Stepping up demand for tax concessions in the forthcoming Budget, the fintech industry is stressing that the fiscal and non-fiscal incentives are needed to promote financial inclusion and move towards a less-cash economy.
The fintech industry and experts have urged Finance Minister Nirmala Sitharaman to lower the TDS rates, saying such a move would free the capital for the sector without any impact on the government’s revenue.
Sitharaman is scheduled to present the Union Budget for the next financial year on February 1.
Nitin Jain, Partner, Financial Services, PwC India, said qualification criteria for digital lenders, short-term credit, partnership guidelines with loan service providers, data governance norms, transparency norms are all required to ensure an optimal business environment for digital lending.
Mihir Gandhi, Partner & Payments Transformation Leader, PwC India, stressed on increasing the scope of the Payments Infrastructure Development Fund (PIDF) and introducing Central Bank Digital Currency for wholesale and retail payment transactions.
Shruti Aggarwal, Co-founder, Stashfin, said the financial empowerment of women also leads to her family being financially empowered.
It will be encouraging to have a budget that is guided by this principle, with a specific focus on the digital financial inclusion of every woman to enable her to be financially ‘atmanirbhar’, she said, and expressed hope that the Budget will incentivise smaller NBFCs led by women entrepreneurs through tax rebates.
On what should be in the Budget, Kapil Mehta, Co-founder, SecureNow, said fintech plays a major role in providing access to finance and insurance for small businesses and individuals in remote areas.
“It would be extremely helpful if, in the Budget, TDS rate for fintech startups is reduced to 1 per cent. This will free up much-needed working capital without costing the exchequer because the TDS is refunded in any case for loss making companies,” he said.
Mehta also suggested that to stimulate financial access, the government could have large PSUs create a financial inclusion fund, similar to the CSR requirements. This fund could be run in a commercial manner.
Amid high hopes from the February 1 Budget, Praveen Dhabhai, COO, PayWorld, said fintech has played a major role in promoting transparency, cashless economy and access to timely payments to underprivileged in remote corners of the country.
“It is imperative to provide the conducive environment to both new and existing fintech companies / startups, in terms of easing access to funding at concessional rates and lower taxation by providing ‘Infrastructure Status with special provisions’ for the new-age yet important nation building industry such as fintech,” said Dhabhai.
Nitya Sharma, CEO & Co-Founder, Simpl, stressed that there is an urgent need to deepen financial inclusion and create a more robust financial ecosystem that would be able to withstand future disruptions like the pandemic, much better.
“Though PSU banks have been actively exploring partnerships with new-age fintech to digitally transform themselves, initiatives from the government in the form of sufficient incentives, outreach programmes for adoption of digital channels and streamlining of the current digital financial channels are needed to deepen financial inclusion across the nation,” he said.
Manan Dixit, Founder, FidyPay, said in rural India the financial inclusion gap is still visible.
“To bring them all onto the financial inclusion platform, we must first enable UPI in cooperative banks and microfinance institutions. Once its done, their customers, the unorganised sectors, small businesses, farmers, truckers, and individuals will be able to do digital transactions in their daily lives,” Dixit said.
On his expectations from the Budget, Vineet Tyagi, Global CTO, Biz2X, said the government should allocate allowances and resources to speed up digital innovation to enable banking space adapt to disruptive changes that occurred during the last two years.
Banks are required to adopt proactive outreach programs to make access to credit convenient. The government should shift from cash-drive to digital oriented and cashless economy for a seamlessly functional economy,” he suggested.