A Look at the Pre-budget Expectations for Fintech Industry
The Fintech players are expecting a sizable reduction in corporate taxes as promised by the Finance Minister
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The Fintech industry was in its element in 2017, stimulated by constructive policies and digital innovation. This is only going to get better with the Union Budget 2018.
Coming up with the most advanced digital payments system, India has proved to be at par with among nations like Japan, Hong Kong, UK and Australia. E-filing, alternative lending, digital payments, cryptocurrency transactions and online investments among others have become an everyday reality in India. Did you know that digital wallet transactions have risen by 64% in 2017 alone as opposed to the number of transactions in 2016?
MSME arena also enjoyed a big surge in their credit supply, thanks to the Fintech landscape and it has been a driving factor in making our economy more data-driven and inclusive.
Indian is all set to amp up its Fintech game and discover its true potential, riding high on expectations from the Budget 2018. Here are some of them.
Budget to Take the Fintech Sector Forward with Positive Policies
The who's who of the industry are expecting the government to set aside a corpus that will be used to fortify the Fintech landscape. The industry is already juggling different pioneering technologies to disrupt and penetrate the current digital order. The industry requires further incentives to drive this cause. Security of online transactions is another key aspect to address.
Clarity on Taxation of Cryptocurrency
While the Reserve Bank has asked investors to exercise caution when dealing with cryptocurrencies as they are not authorized by the RBI yet, cryptocurrencies continue to be popular. Techno-savvies believe that there is much to gain from the remarkable value-growth it exhibited in 2016 and 2017. It is speculated that government will specify taxation rules when it comes to investing in bitcoins. Investors are seeking further clarity on whether this will need to be disclosed in tax returns forms.
Sustained Push Towards a Digital-First Economy
Online payment methods are now expected to replace paper currency by 2022 as per the industry speculations. This is indeed an extraordinary dream; however, the digital payments ecosystem will require strong government support (with positive policies) to make this a reality. The Centre has introduced vital supply-side resources such as eKYC, Aadhaar linking, UPI and India Stack. eKYC, and Aadhar. This infrastructure should also look at demand-side issues and continue to incentivize e-payments to promote better implementation and cooperation.
Tax Respite for Startups
Sorting tax implications is one big challenge faced by any Indian startup. The Fintech players are expecting a sizable reduction in corporate taxes as promised by the Finance Minister. The current tax rate is 25% for SMEs and some relief may be considered. This benefit can reach the end customers as well.
More Concessions/Incentives for the ESOPs
Fintech startup sector is booming as we speak, and they are known for offering ESOPs to their staffs, especially when they are not in a position of offer higher cash incentive (say, in the initial growth phase). Tax rebates for ESOPs can be a breather and encouraging.