The Indian Union Budget for the fiscal year 19-20 was presented by the Union Finance Minister Ms. Nirmala Sitaraman on the 5th July 2019. There were many takeaways for Fintech sector. The expectations for Fintech sector includes
- Tax sops
- Plans and roadmaps for the digital payments
- Encourage digitization of the Fintech industry
- Promote startups and entrepreneurs of the Fintech industry for tax cuts and no corporate tax for the Fintech startups.
As per the NASSCOM report for the year 2018, there were 400 Fintech companies in India. They estimated the Fintech sector growth to be $2.4 billion by the year 2020 in India. Fintech firms have huge expectation from the Union Budget 19-20 and that primarily includes incentivizing the digital payments, push towards tech-led infra and tax relaxations.
The above being the expectations from the industries and people in the Fintech sector, it is certainly met by the Union Budget planned by the government of India. They have made it easy for digitizing the Fintech sector and encourage digital payments. The highlights of the Union Budget for the Fintech sector include the following as listed below. Due to these factors, Fintech companies are looking at great growth in their business.
Easing out the startups and Angel Tax regulations for the startups: Union Budget of 2019-2020 presented some SOPS to the Fintech startups. The ideas of taxation for the investments in the Fintech startup also called the Angel tax regulations were relaxed and the need to scrutinize the investments made in the startups if requisite documents were presented is relaxed. The systems of e-verifications for the investments made in the startup sector were to be made and developed by the government so that there will be no further tax scrutiny once the e-verifications gets over.
Digital payments are the heart for the growth in Fintech sector: Through various platforms and marketing strategy, the form of digital payments will be encouraged all over India. This will allow the digital economy of India to grow steadily and foster innovation as well as research in the Fintech sector. This will lead to digitizing and making the payments cashless and thus encourage digital payments across the nation both in towns and rural areas.
Make sure that digital financial system is implemented for the usage of the UPI, BHIM, RTGS, NEFT and Aadhar Pay: Digital mode of transaction should be made mandatory for certain companies, bank withdrawal, and transfers. To add teeth to the digital economy and the Fintech industry, in general, the companies with Rupees 50 crore and above turnover needs to go for digital method of financial transactions such as UPI, RTGS, NEFT, Aadhar Pay and BHIM as the mode of payment. There will definitely be discounts to such merchants and companies and the additional money required will be absorbed by Banks and Reserve Bank of India.
Cash Withdrawal when you stop incentivizing – This will promote digital transactions: This may look like a negative decision from a customer perspective because they are forced to go cashless in their transactions. But the motive of the government is to digitize all transactions and eventually people will feel glad about this change. In the current Union Budget, the withdrawal of money in cash above 1 crore will attract an additional 2 % TDS. This will improve and encourage funding in the Fintech industry and give confidence to all about the digital mode of transactions in the future. Slowly this will become a practice in every nook and corner of the country.
Digital platforms for the MSME’s Fintech industries: The Government has taken efforts to make payments platforms for the Micro, Medium and Macro industries in the formal Indian economy. These digital platforms will persuade the setting up of the Fintech industries in the digital era.
The Union Budget of the year 2019 did address the push and expectations of the Fintech industry in general and paved the way for the future of Fintech companies. Thereby future digital growth of the country is assured. These are the primary reasons that made the Fintech business feel glad and instilled confidence in them allowing them to focus on the huge growth potential. To start with, the 2% interest rate funding on business loans for all the GST registered MSMEs is going to be a breakthrough not only for the MSMEs but to the fintech ecosystem.
Co-Founder at FlexiLoans.com
Ritesh Jain is the Co-Founder @ FlexiLoans.com, one of India’s leading technology-based online lending platform started that with an endeavour to solve the problems that small businesses face in accessing quick, flexible and adequate funds for growing their businesses. The team’s vision is to give the cash-starved SME and MSME sector, ‘financial access at a click’. At Flexiloans.com Ritesh is responsible for finance and operations.
Ritesh has over 18 years of experience across start-up, finance, technology, telecom and hospitality domains. Prior to Flexiloans.com, he has held several leadership positions including Chief Financial Officer at Housing.com and Head-Planning at Tata Teleservices where he implemented and integrated 12+ IT systems including fraud management, SAS, Cognos, CRM and Business intelligence tools. Ritesh has also worked with Citibank and Starwood Hotels.
Ritesh is a passionate runner and has participated in various marathons. He can Play table tennis equally well with both hands. He loves travelling and spending free time with his daughter
He is Dean’s Lister MBA from Indian School of Business (ISB- Hyderabad), qualified Chartered Accountant and a Bachelor of Commerce graduate from the University of Delhi.