FinTech’s expectation on Budget 2019

Fintech have witnessed a lot of regulations, liquidity crunch and critical factors in 2018. However the previous budget didn’t address all the expectations. There’s a lot of anticipation of tax rebate, new RBI guidelines, access for credit flow and low cost funds and many more. Given this scenario it becomes imperative to take a look at what industry expert have to say.

“Low level of financial inclusion within the country is a critical factor, restricting credit flow for both personal consumption as well as for financing entrepreneurial endeavors. Integrating the age-old concept of lending with technology-driven marketplace, online P2P lending has emerged as a powerful source to bridge the credit gap that exists and must be encouraged by the government. To encourage lenders, FM must consider exempting investment in P2P lending from taxation, allowing defaults from loans to be considered as capital loss when filing returns and providing special tax rebate to lenders who fund loan requirements of MSMEs. This would increase investments by lenders in P2P lending unlocking supply side, thereby putting pressure on rates and easing the current liquidity crunch.” Mr. Rajat Gandhi, Founder & CEO, Faircent.com

“We hope that this year’s budget will suitably address two of the long pending requests of the Online Lending industry. First and foremost, budget should eliminate the need for SMEs to pay TDS on all interest payments due on Business Loans. This TDS payment makes the loan repayment process very complex for SMEs to manage, most of which don’t have the luxury of using services of highly paid accountants. Secondly, enable Online Lending firms to also access low cost funds from government schemes such as MUDRA and CGTMSE. These low cost funds are only available to Banks and NBFCs as of now, and a substantial part of these funds remains unutilized. Given government’s objective to enable SMEs to access low cost credit and the success Online Lending industry has had in simplifying the lending process and channelizing new capital to SMEs over last few years, it would be important to bring parity between Banks/NBFCs and Online lending firms on the subject. SMEs continue to be a key engine of economic growth and providing them access to low cost funds in a simple, convenient process would go a long way in enabling them to contribute more meaningfully to economy and employment creation in the country.” Mr. Amit Sachdev, CEO, Co-Founder, CoinTribe

“In November last year, Prime Minister Narendra Modi announced a number of  new measures aimed at providing MSMEs with better access to credit and helping reduce the cost of borrowing for them. This has provided the sector with a positive outlook for the upcoming financial year. We can expect the government to introduce measures to reduce compliance burden and ease working capital blockages, with possible reductions in tax rates in the 2019 Union Budget.
The government must also consider reducing the GST rates in the forthcoming budget. Considering the difficulties face by SMEs in the country, Finance Minister Arun Jaitley is expected to increase the sales threshold for compulsory GST registration from Rs 20 lakh to somewhere between Rs 50-75 lakh. Further, the government should also look to introduce a concessional tax scheme for small service providers.” Mr. Vivek Tiwari- MD & CEO, Satya MicroCapital

“We can expect the Modi government to introduce tax concessions for the middle class and salaried persons in the Interim Budget 2019, given that this segment accounts for a huge portion of tax-payers and the population in general. This may include bringing the income tax limit from the current amount of INR 2.5 lakh to INR 5 lakh.
The budget could also see a hike in the savings limit, along with a possible reduction in interest rates on housing loans. There is a possibility that the exemptions under Section 80C may also be revised by the government from INR 1.5 lakh to INR 2.5 lakh to incentivize savings among the salaried class. Moreover, we can also expect the government to bring the pensioners under income tax rebate to offer them more benefits. In the commercial market, we can expect the government to further bring down the basic customs duties and possibly even review the GST rates that are currently levied.”- Mr. Subir Mukherjee, Founder & Director, GIBL

“I hope the Garg Committee submits its regulation report before the Budget 2019 session. If that happens then I’m confident that our Finance Minister will address the cryptocurrency issue in the Parliament, and ensure that we take a positive and progressive step forward as a country, and shape the future of digital assets in India,” said Mr. Nischal Shetty- Founder & CEO, WazirX 

The FM is likely to refrain from announcing big-ticket changes or new schemes as it is an interim budget right before the elections. However, here are a couple of announcements that we are expecting.

Expectations for the common man:

Income Tax is going to be one of the most talked-about topics. Huge tax relief to people falling in the income bracket up to ₹20 Lakh per annum is expected. New income tax slabs might be introduced.

Most of the consumer goods will become cheaper. As PM Modi has already hinted saying “the country is reaching a stage where 99 percent of goods can be at or under the 18 percent tax slab.” However, the prices of alcohol and tobacco products might go up.

Expectations for MoneyTap / Lending FinTech

Lending startups have become a big boon for the nation by bringing hassle-free and accessible credit to the unbanked population. The market for small-ticket loans is huge. So naturally, we are expecting the government to focus more on increasing the availability of finance for the FinTech industry to promote higher growth. We are hoping that the government would expand MUDRA and other existing credit guarantee schemes to cover FinTech looking to supply credit this year.

Aadhaar bill in the parliament will free up banks and finance companies to do eKYC & eSign, significantly reducing costs. Also, GST slabs may become lower for businesses”. From Bala Parthasarathy, CEO & CoFounder, MoneyTap

“Building on the vision of Digital India, we have witnessed positive developments aimed at the Fintech Industry during all recent budget sessions. Though last year was not as satisfactory in terms of reforms, enough leeway must be given to the decision-makers who are closely tracking the broader financial landscape of our country. This year, the industry hopes are quite high as it expects easing of MUDRA and SIDBI refinancing norms, relaxations in eKYC-based lending limit, and creation of a superior demand ecosystem. Making eMandate adoption compulsory for the banks will also help in reducing the overall TAT (Turnaround Time) and be yet another positive move. We believe that the government understands both the sector’s importance and the prevailing concerns and will be doing the needful this year,”  Mr. Manish Khera- Founder & CEO, Happy.  

 FinTech’s expectation on Budget 2019

Fintech have witnessed a lot of regulations, liquidity crunch and critical factors in 2018. However the previous budget didn’t address all the expectations. There’s a lot of anticipation of tax rebate, new RBI guidelines, access for credit flow and low cost funds and many more. Given this scenario it becomes imperative to take a look at what industry expert have to say.

“Low level of financial inclusion within the country is a critical factor, restricting credit flow for both personal consumption as well as for financing entrepreneurial endeavors. Integrating the age-old concept of lending with technology-driven marketplace, online P2P lending has emerged as a powerful source to bridge the credit gap that exists and must be encouraged by the government. To encourage lenders, FM must consider exempting investment in P2P lending from taxation, allowing defaults from loans to be considered as capital loss when filing returns and providing special tax rebate to lenders who fund loan requirements of MSMEs. This would increase investments by lenders in P2P lending unlocking supply side, thereby putting pressure on rates and easing the current liquidity crunch.” Mr. Rajat Gandhi, Founder & CEO, Faircent.com

“We hope that this year’s budget will suitably address two of the long pending requests of the Online Lending industry. First and foremost, budget should eliminate the need for SMEs to pay TDS on all interest payments due on Business Loans. This TDS payment makes the loan repayment process very complex for SMEs to manage, most of which don’t have the luxury of using services of highly paid accountants. Secondly, enable Online Lending firms to also access low cost funds from government schemes such as MUDRA and CGTMSE. These low cost funds are only available to Banks and NBFCs as of now, and a substantial part of these funds remains unutilized. Given government’s objective to enable SMEs to access low cost credit and the success Online Lending industry has had in simplifying the lending process and channelizing new capital to SMEs over last few years, it would be important to bring parity between Banks/NBFCs and Online lending firms on the subject. SMEs continue to be a key engine of economic growth and providing them access to low cost funds in a simple, convenient process would go a long way in enabling them to contribute more meaningfully to economy and employment creation in the country.” Mr. Amit Sachdev, CEO, Co-Founder, CoinTribe

“In November last year, Prime Minister Narendra Modi announced a number of  new measures aimed at providing MSMEs with better access to credit and helping reduce the cost of borrowing for them. This has provided the sector with a positive outlook for the upcoming financial year. We can expect the government to introduce measures to reduce compliance burden and ease working capital blockages, with possible reductions in tax rates in the 2019 Union Budget.
The government must also consider reducing the GST rates in the forthcoming budget. Considering the difficulties face by SMEs in the country, Finance Minister Arun Jaitley is expected to increase the sales threshold for compulsory GST registration from Rs 20 lakh to somewhere between Rs 50-75 lakh. Further, the government should also look to introduce a concessional tax scheme for small service providers.” Mr. Vivek Tiwari- MD & CEO, Satya MicroCapital

“We can expect the Modi government to introduce tax concessions for the middle class and salaried persons in the Interim Budget 2019, given that this segment accounts for a huge portion of tax-payers and the population in general. This may include bringing the income tax limit from the current amount of INR 2.5 lakh to INR 5 lakh.
The budget could also see a hike in the savings limit, along with a possible reduction in interest rates on housing loans. There is a possibility that the exemptions under Section 80C may also be revised by the government from INR 1.5 lakh to INR 2.5 lakh to incentivize savings among the salaried class. Moreover, we can also expect the government to bring the pensioners under income tax rebate to offer them more benefits. In the commercial market, we can expect the government to further bring down the basic customs duties and possibly even review the GST rates that are currently levied.”- Mr. Subir Mukherjee, Founder & Director, GIBL

“I hope the Garg Committee submits its regulation report before the Budget 2019 session. If that happens then I’m confident that our Finance Minister will address the cryptocurrency issue in the Parliament, and ensure that we take a positive and progressive step forward as a country, and shape the future of digital assets in India,” said Mr. Nischal Shetty- Founder & CEO, WazirX 

The FM is likely to refrain from announcing big-ticket changes or new schemes as it is an interim budget right before the elections. However, here are a couple of announcements that we are expecting.

Expectations for the common man:

Income Tax is going to be one of the most talked-about topics. Huge tax relief to people falling in the income bracket up to ₹20 Lakh per annum is expected. New income tax slabs might be introduced.

Most of the consumer goods will become cheaper. As PM Modi has already hinted saying “the country is reaching a stage where 99 percent of goods can be at or under the 18 percent tax slab.” However, the prices of alcohol and tobacco products might go up.

Expectations for MoneyTap / Lending FinTech

Lending startups have become a big boon for the nation by bringing hassle-free and accessible credit to the unbanked population. The market for small-ticket loans is huge. So naturally, we are expecting the government to focus more on increasing the availability of finance for the FinTech industry to promote higher growth. We are hoping that the government would expand MUDRA and other existing credit guarantee schemes to cover FinTech looking to supply credit this year.

Aadhaar bill in the parliament will free up banks and finance companies to do eKYC & eSign, significantly reducing costs. Also, GST slabs may become lower for businesses”. From Bala Parthasarathy, CEO & CoFounder, MoneyTap

“Building on the vision of Digital India, we have witnessed positive developments aimed at the Fintech Industry during all recent budget sessions. Though last year was not as satisfactory in terms of reforms, enough leeway must be given to the decision-makers who are closely tracking the broader financial landscape of our country. This year, the industry hopes are quite high as it expects easing of MUDRA and SIDBI refinancing norms, relaxations in eKYC-based lending limit, and creation of a superior demand ecosystem. Making eMandate adoption compulsory for the banks will also help in reducing the overall TAT (Turnaround Time) and be yet another positive move. We believe that the government understands both the sector’s importance and the prevailing concerns and will be doing the needful this year,”  Mr. Manish Khera- Founder & CEO, Happy.  

Arbind

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