Budget 2017: Expectations of Fintech
Startups from Modi Government
With India moving towards becoming a cashless economy, there are a lot of expectations from the digital payments industry. As the agenda of the digital economy takes center stage, the
government has already taken a number of steps to encourage electronic payments.
ALSO READ: The Jaipur Lit Fest tried to be completely cashless and failed. Here's what happened.
Even as Finance Minister
announced a slew of measures as incentives for digital payments, which are guaranteed to benefit the e-commerce industry as a whole, startups like Mobikwik, CashKaro and
have pinned a lot of hopes on the upcoming Budget. Here’s what they are expecting from the government:
• The Budget must announce measures to upgrade digital infrastructure across the country. This will encourage more merchants and consumers to transact on non-cash, online platforms.
• The Budget must reduce corporate tax for start-ups and companies promoting digital payments ecosystem. At the moment, it is flat at 35 per cent.
• Access to online services should actually be a fundamental right. This will move a large portion of cash transactions to formal economy.
• There should be reduction in income tax for individuals and companies promoting secure digital payments.
• The Budget should announce sops for fin-tech companies providing data protection.
• Implementation of GST from April 1 may be deferred to help businesses and overall economy recover from demonetisation. Clear, uniform taxation for all goods and services is important. India should be a tax compliant society. At present, not even three per cent of people pay any income tax.
• Digital India is a laudable initiative. We need to improve digital literacy and connect cities, towns and villages with high-speed internet networks so that every citizen is empowered with access to a mobile broadband connection.
• The Budget must announce steps to tone up physical infrastructure. We need good roads, good connectivity with rural areas where 65 per cent of Indians live. India needs world-class seaports and airports.
• Transactions worth one trillion dollars are done in the country annually. Of these, barely 10 per cent are on digital platforms. Mobile wallet providers have thus clearly a larger role to play.
• Increased Planned Expenditure for Better Infrastructure which can enable more women to join and remain in the workforce.
Expecting the upcoming Union Budget to be very positive and favourable towards the poor, middle class and business community, particularly because these segments were most inconvenienced by Demonetization.
• In a bid to alleviate this pain, we can expect incentives on direct tax. This could mean lower personal income tax rates and lower corporate tax rates too.
• Prime Minister Narendra Modi's flagship project, Startup India might get a push in the upcoming Budget.
• We could see a new set of tax concessions on employee stock options, unlisted securities and convertible instruments.
• The key expectation being complete exemption of service tax. The existing waiver of 15% of service tax on digital transactions up to Rs 2,000 does not encourage universal acceptance of the online payment ecosystem.
•The 2017 Budget should be completely exempt service tax from transaction fee in digital payments. This will help bring down the cost of products & services, leading to more merchants doing business digitally, thereby promoting online commerce and boost financial inclusion in India