Budget 2022: Liberalised tax regime and more, here’s fintech sector’s wishlist

India’s fintech sector has quite the wishlist for the upcoming Union Budget 2022-23, which will be tabled by the Union Finance Minister Nirmala Sitharaman on February 1. The fintech sector expects liberalised tax regime, relaxation of norms and expects the FM to announce measures to ease the liquidity flow to non-banking finance corporations (NBFCs) and fintechs. They also pitched for enhanced financial inclusion due to the operations of fintechs aimed at reaching the unserved population.   “It is essential that the Government announce measures to ease the liquidity flow to NBFCs and fintechs. Further, while ensuring the right degree of regulation, relaxation of norms and tax liberalisation to some extent will allow the fintech sector to boost their reach and operate effectively to offer innovative credit solutions to the borrowers. Focus should also be on enhancing the country’s digitisation bid, to empower the consumers to avail various credit products,” says co-founder and CEO of KreditBee and Fintech Association for Consumer Empowerment (FACE) Madhusudan Ekambram.   Some experts also expect the government to reintroduce the Rajiv Gandhi Equity Savings Scheme (RGESS) to enable first time investors to save taxes while investing in stocks. The RGESS was discontinued after the Union Budget 2017. This scheme was rolled out with the aim to encourage flow of savings of the small investors in domestic capital market, according to the NSDL website.   So how does the RGESS work? Under this scheme, “‘New retail investor’, can invest upto Rs 50,000 in eligible securities and avail additional tax benefit (i.e. deduction) upto Rs 25,000 under Section 80CCG. This is over and above the limit of Rs 1,00,000 currently available under Section 80C of the Income Tax Act, 1961.” Investors can avail RGESS benefits for three consecutive years from the financial year in which the investment under the Scheme was made for the first time by the investor.   “The number of demat accounts opened has more than doubled in 3 years. From 3.5 crore at the end of 2018-19 to 5.5 crore and 7.3 crore in 2020-21 and October 2021, respectively, this is a heartening trend given the severe under penetration of equity assets held by Indians compared to global benchmarks. However, as an ecosystem, these new investors need to be encouraged to demonstrate the right behavior for an asset class like equity,” said founder and CEO of online stock investment platform smallcase Vasanth Kamath.   He further explained, “I would love to see the introduction of a scheme like the Rajiv Gandhi Equity Savings Scheme (RGESS) that enables first time investors to save taxes while investing in a specific universe of stocks. This would incentivise investors to remain invested in a portfolio of relatively less volatile stocks for the longer term, helping them witness the sustained benefits of equity and compounding.”   Industry players also want the government to lower translational costs to promote large ticket size payments in the B2B segment. “Like last year’s fund for incentivising the industry and offset losses incurred due to waiver of Merchant Discount Rates (MDR) on UPI and RuPay transactions, we hope the finance minister will take further actions to minimise translational costs, thereby promoting large ticket size payments in the B2B segment. One such critical step is expected to come through a push towards prepaid transactions through Unified Payments Interface (UPI). With the digital payment industry playing an instrumental role in ushering transparency and formalisation of the economy, the government is expected to promote the industry by encouraging new business deployment solutions,” underscores George Sam, Business Head and co-founder at the end-to-end retail transaction banking company Mindgate Solutions.   CEO and co-founder of the online personal loan app EarlySalary, Akshay Mehrotra also hopes that the government should work towards helping customers get access to affordable credit on demand. “We hope the 2022 budget will be a boon to the fintech sector as the lending space continues to grow. For the same, I think that there should be changes in debt financing options to get access to financial institutions beyond banks. Fintech and new direct digital lending players need access to more debt capital and carveouts, which can help lower the cost of borrowing for them and help customers get access to more affordable credit on demand,” Mehrotra explains.   Also read: Budget 2022: Companies want FM to enable foreign listing