Fintech sector wants lesser tax, more support

The fintech sector in the country has been gaining more relevance during the Covid pandemic, emerging as the a driving sector of the economy. As the D-day for the presentation of the Union Budget coming closer, several fintech companies in the country are placing forth their expectations from the government.

The fintech companies 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 the experts, the Union government should cater to the need for a more focused approach towards sustaining the growth of the fintech companies 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.

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," he added.

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.

He 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," he added.

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.