Just like other industry players, fintech companies expect the government to strike a balance between reforms and fiscal prudence in Budget 2024. Some expect the government to slash TCS (tax collected at source) from 20 percent to 1 percent on international transactions, while some also expect the Union finance and corporate affairs minister Nirmala Sitharaman to streamline the regulatory framework in order to support the companies in the financial technology space.
They also foresee greater emphasis to be given in Budget 2024 on digital public infrastructure, which they consider imperative to achieve the $5-trillion economy. One industry player quoted in the article below eyes initiatives which foster entrepreneurship and employment, while another wants special policies to promote credit on UPI (Unified Payments Interface).
Fintech players also expect the government to enact policies in Budget 2024 that facilitate the growth of startups and the fintech ecosystem. They also look forward to a range oftax sops, tax holidays and removal of angel tax for faster growth.
Reduction in TCS
One fintech player believes that the finance minister should alleviate strain on students and travellers by slashing the tax collected at source (TCS) from 20 percent to 1 percent.
Swapnil Bhaskar, Chief of Strategy, Niyo, says,“To alleviate financial strain on students and retail travellers and boost global business, Niyo is expecting a reduction in TCS at par with the crypto industry on international transactions above the threshold in the upcoming budget. The threshold also needs to increase to at least ₹10 lakh. Bringing credit cards under TCS will ensure a level playing field with other payment instruments."
“Issuing digital banking licences aims to enhance financial inclusion, foster innovation, streamline banking operations, leverage technology for better customer experiences, reduce operational costs, and align with the government's push towards a digital economy. Additionally, increasing the LRS (Liberalised Remittance Scheme) limit to $500k, considering inflation and the last revision in 2015, will benefit cross-border transactions," he says.
Adoption of digital banking solutions
Another stakeholder of the financial technology sector believes that the Budget 2024 must foster innovation and financial inclusion.
“As India’s digital economy continues to grow, the upcoming budget must address key areas in the transaction banking and escrow account sectors to foster innovation, security, and financial inclusion. The government should consider encouraging the adoption of digital banking solutions by providing tax benefits or subsidies to both financial institutions and end-users. This could significantly enhance the penetration of digital banking services in rural and underserved areas, promoting financial inclusion and economic growth," Vaibhav Tambe, Founder & CEO, TransBnk, says.
“Allocating funds for the development and implementation of advanced cybersecurity infrastructure is crucial. With the rise in digital transactions, ensuring the security of these transactions must be a top priority. This includes investments in state-of-the-art technology to prevent fraud and safeguard consumer data. The government should also streamline regulatory frameworks to support the growth of fintech companies and encourage innovation," he adds.
Focus on digital public infra
There should also be emphasis on advancing India’s digital public infrastructure in the Budget, believes Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia.
“The upcoming Union Budget is anticipated to strike a balance between reform and fiscal prudence. While markets keenly await a continuation of government spending and infrastructure push, measures to boost consumer spending and tax relief could provide a much-needed fillip. We foresee a continued focus on advancing India’s digital public infrastructure, essential for achieving the $5 trillion economy dream. Enhanced government initiatives for financial inclusion, smart cities, AI Centres of Excellence, and public-private partnerships in tech adoption are crucial. The fintech industry will continue to innovate with robust government support," he adds.
“The government should enact initiatives and policies that facilitate the growth of the Startups and fintech ecosystem. It is important to create incentive structures for the startups. Some tax benefits such as tax sops, tax holidays, reduction in GST rate for startups, removal of angel tax etc. are needed for faster growth of the ecosystem. Further, favourable regulations and policies should be formulated to boost digital infrastructure," says Ravi Jain, Co-Founder & MD, Blostem.