Fintech Startup
Sumit Chanda, Founder and CEO, Jarvis Invest
“We expect the budget to be favourable for the retail investors. Hopefully some positive steps should be taken on Capital Gains and income classification which will be a boon for the retail investors and traders. We also hope that the FM incentivizes Fintech start-ups especially those using AI. We can hopefully see positive news for manufacturing, Renewable Energy, Healthcare, EVs.
Salaried workers are the main source of the country’s tax revenue and any changes in their taxation will have a significant impact on the economic recovery. There has been murmurs about the tax exemption limit being increased to 5 lakhs from the existing 2.5 lakhs. I would certainly look forward to it. It would mean higher disposable income which can lead to higher consumption and investments. This can definitely boost the economy.
We, as a country, have a very good opportunity to become the manufacturing hub to the world. If the manufacturing sector can be incentivized in some form, this dream can be realized. The Central Government can certainly nudge the State Governments to implement the four labor codes. A reduction in the corporate tax will go a long way in making both the manufacturing and the service sectors grow. Any positive news on these fronts will be a big boost to the markets.”
Anand Kumar Bajaj, Founder, MD & CEO, PayNearby
Presently, India’s path to financial inclusion is being paved, courtesy of the ground-breaking financial solutions offered by leading fintech players. A robust tech stack riding on the back of a strong distribution network has opened doors for Bharat to access innovative financial products and services. The work that we are doing to make banking services accessible to all in Bharat is a case in point of the one-of-its-kind infrastructure that we have built to relay these services. However, for these services to reach the citizens in the hinterlands needs technology, security, trust and the necessary Government support. Towards this purpose, Budget-2023 should urgently consider and offer some tax benefits on the total expenditure incurred by fintechs involved in the financial inclusion mission. A GST subsidy, even in a small percentage, will go a long way in helping banking services and Government benefits reach the masses with much ease. Plus, this will encourage companies in the financial inclusion space to innovate more and build revolutionizing technologies to make financial services available to everyone, everywhere.
Today, more than 90% of PayNearby’s BC (Business Correspondent) network is committed to operating in tier II and beyond regions, serving as banking hubs in locations with limited financial infrastructure. To ensure the viability of this network in offering uninterrupted services to all across the country, we sincerely hope that in this Budget, the GST and TDS for financial inclusion services at BC outlets to be waived off or at least reduced. This will ensure sustainable growth and inspire more and more last-mile retail banking agents to offer seamless banking services from their stores to all citizens in Bharat.
We are moving into an exciting phase wherein fintechs, armed by the BC network, will become the force multipliers in India’s inclusion endeavor. We are positive that this Budget will be a game-changer for the financial services ecosystem, where these small yet significant steps will help bridge the urban-rural divide and bolster India towards the $5 trillion economy benchmark much sooner than later.
Bhavin Patel, CEO and Co-founder of LenDenClub
Peer-to-Peer lending has emerged as an alternative financing business model recognised by RBI. During the pandemic, the segment has proven to become a mighty source to bridge the current credit gap. However, we need help to strengthen our contribution to the government’s vision of financial inclusion. It would be helpful to receive indirect benefits for the overall digital lending sector, such as incentives or tax benefits.
Additionally, P2P lending has evolved as a prominent investment asset class, ensuring the flow of investments from those with excess to those in need. While we work to meet the credit demands, we need assistance from the government to open the supply side by incentivising P2P lenders with tax exemptions up to a certain income. Further, it should allow bad debt write-offs, enabling defaults to be treated as capital losses during filing returns.
Not just for lenders but also on the borrowers’ side, personal loan repayment can become a part of the exemption under section 80C.
Furthermore, asset-based lending should be allowed to boost the confidence of lenders. This will also encourage innovation in secured lending, while the current innovation is focused on only unsecured lending.
Deepak Kothari, Co-founder of ftcash
The Union Budget 2023-2024 has the opportunity to help provide the fintech sector with the much needed impetus. The key areas where government support will go a long way are-
- Liberalisation and Enhancement of Credit Lines from Banks-Currently fintechs collaborate with banks on a one to one basis. The provision of a government scheme which provides a sovereign guarantee by the government of such credit lines will help channelise and enhance access to funds for fintechs and also allow targeting of certain sectors/segments/regions in a cost efficient manner.
- Rationalisation of GST Input Credit Framework in Colending Arrangements-Fintechs today collaborate with other financial services players and invariably in such arrangements there’s a potential loss of Input Credit in the current GST framework. Ensuring that the input credit is fully provided for will go a long way in ensuring that revenue leakages are avoided and benefits can be consequently passed on to the end consumer
- Enhancement of Legal Framework for Wilful Defaulters-The legal resolution for defaulters today is mired in a lengthy process which is inefficient and clogging the legal system. A seamless, efficient and transparent process which provides for a time bound resolution of cases where EMIs go into default will ensure that the financial services industry is strengthened. For example today if businesses don’t pay GST, there’s a freeze which happens on the accounts, a similar framework for Sec 138 cheque bounce cases will ensure that wilful default is minimised.
Headquartered in Mumbai, ftcash, an NBFC and a responsible lending Fintech was founded in 2015 by Sanjeev Chandak, Deepak Kothari and Vaibhav Lodha. The company creates an open architecture-based platform for merchants to initiate digital payments in less than five minutes by aggregating all payment methods including credit and debit cards, net banking, mobile wallets, UPI and PayPal. The company has more than 300 employees across eight states in India and over 60,000 merchants in its network. It has disbursed Rs 600 crore worth of loans till now. Ftcash is witnessing 22X growth in AUM since 2019. The company is expecting disbursals to grow 3X by 2023. ftcash is backed by several investors including Accion, FMO and IvyCap Ventures.
Sumeet Mehta, Cofounder & CEO, LEAD
“Policy promotes the use of technology in teaching and learning. The direction and guidance of the Ministry of Education, as per the policy, is to promote multimodal learning so that high quality resources are made available to all students, irrespective of location or background. This can be enabled by increasing the penetration of digital infrastructure in schools and educational institutions. Digital tools and content in smart classrooms are key to enriching students’ learning.
GST exemption on the supply of goods (including TVs/tablets for digital education, currently @28% GST) and services (used for teaching and learning applications and content, currently @18% GST) to educational institutions and intermediaries can reduce the overall cost that is currently passed on to schools and parents. This will make goods and services for education more affordable, and will foster the implementation of NEP across the country.
Additionally, GST exemption on printing of school textbooks will make these books more affordable for low-income parents. For the same reason, printing and service of assessments/examination papers that are a part of the curricula in schools should also be exempted from GST.”
LEAD is India’s largest School Edtech company founded in 2012 by Sumeet Mehta and Smita Deorah, with the mission to transform school education in India. It combines deeply researched curriculum and pedagogy with technology to deliver an integrated system of teaching and learning that improves student learning outcomes and teacher performance in 3000+ schools across India. LEAD’s integrated system is available to schools in 400+ towns and cities across India, reaching 1.2 million+ students and empowering over 25,000 teachers. LEAD-powered schools provide children with international standard education and national-level exposure for all-round growth, with a focus on helping them become confident and succeed in life.
Gurjodhpal Singh, CEO, Tide India
“The MSME sector has potentially turned out to be a key catalyst for the Indian economy in recent years, considering India is home to over 63 million MSMEs contributing close to 30% of the country’s GDP. Reiterating such a significant figure, it has become imperative for the government and the Fintech syndicates to work in alignment with each other and make the sector more stronger, resilient, and developed in terms of mutual growth and profitability. To achieve the vision of making India a USD 5 trillion economy while creating a new self-reliant nation, the government should introduce a much-needed policy framework mandating large corporates to include the MSME segment in their business models in some or the other way. This can be done by procuring a certain percentage of the priority sector’s business or aiding them with the current technological innovations and marketing tactics to bolster their business growth. Furthermore, the slowdown we saw in the economy last year has caused significant pain to MSMEs due to high-interest rates in the lending landscape inhibiting their operational capabilities. Therefore, soft loans at minimal interest rates or any reduction in the SME lending rates will provide impetus to the sector’s steadfast growth. On the other hand, the rising interest rate would pose a risk to the micro, small and medium-sized enterprises (MSME) portfolio of lenders.
Lastly, while keeping in mind that the whole world is undergoing massive digital transformation, India’s significant chunk of the MSME population that resides in tier 2, 3, and 4 cities lacks digital awareness and inclusion to a great extent. The government must introduce certain initiatives with a focus to train and coach the sector on the technological advancement and marketing front to spur digitisation across the country.
CRYPTO Industry
Rahul Pagidipati, CEO, ZebPay
“2022 has been a crucial year for the Web3 and crypto industry. Despite being a relatively new and untested market, the crypto industry has witnessed rapid growth in India with an increasing number of people showcasing interest to invest in the asset class. According to a report released by FICCI and EY in 2022, Web 3.0 and blockchain can add a staggering $1.1 trillion to India’s GDP by 2032.
In FY22, the government announced a 30% plus surcharge and cess as well as 1% TDS deduction on the transfer of Virtual Digital Assets. While it is great to see the government take a step towards regulating VDAs, in the upcoming budget 2023, we urge the government to create a progressive regulatory framework and offer clarity on taxation by reducing TDS and Capital Gains Taxes and levelling them with other asset classes such as stocks and bonds. This will address the ongoing concerns and uncertainty about the industry by creating transparency and help industry players to protect users from any kind of black swan events like the FTX collapse. Clear governance and regulatory framework will enable more people to invest in VDAs and attain financial freedom. It will also encourage innovation to transform existing businesses through blockchain technology as well as build newer solutions for the industry to thrive further”.
Blockchain industry
Pratik Gauri, Co-founder & CEO, 5ire
“Of course, the decline of trading volumes by as much as 85-90% is concerning, and the fear of not attracting investments in the Web3 innovative startups will impact the overall picture. But, as I have said earlier, the taxation of income and assets is entirely the purview of the government, and they have the exclusive right to impose and collect such dues.
What I feel is of utmost importance here is to remember that any monumental shift caused by Web3 will be the world shifting from a “value capture” economy to a “value creation” economy. This will require a new set of rules, which democratizes access to resources for creators and makes value creation as rewarding as capturing value. This means a direct relationship between the human capital and the consumers of its creation.
It is vital to ensure that any taxation regime does not hamper the development of India’s talent in Web3 and the supercharged innovative environment India has been experiencing recently.
The efforts to introduce the new CBDC show that the RBI and taxation regime is committed to innovation. We look forward to working with them to produce dApp, DeFi, and ReFi solutions that help.”
Ankit Wadhwa, Co-founder & CEO, Rario
“While 2022 has been a transformative year for the digital collectibles industry, with the increasing popularity of digital trading cards and virtual digital assets with proof of ownership using blockchain technology, the industry size rose to approximately 426 billion USD in 2022 worldwide. We also believe that blockchain technology will help India to rise considerably in rank amongst the nations to be the undisputed world leader in this space. We hope that the G20 presidency is also used to push innovation in blockchain technology with India at the forefront.
We welcomed the carve-outs made by the Ministry of Finance in June 2022 in the definition of virtual digital assets (VDAs) that was introduced in the last budget in February 2022, excluding (a) tokens whose transfer results in the transfer of ownership of the underlying tangible asset; (b) gift cards or vouchers; (c) mileage points, reward points or loyalty card, being a record given without direct monetary; and (d) subscription to websites or platforms or application. We sincerely also hope for a further revision in the definition of VDAs in the upcoming Finance Bill separating crypto-based tokens from non-crypto based tokens and separate tax regimes for each. Our digital player cards are on a custom-made Rario blockchain, where we have no reliance on cryptocurrency whatsoever and they can be purchased only through fiat currency.”
Preekshit Gupta, Vice President – APAC & MEA, Bureau
“The Indian identity verification and fraud prevention industry is on the cusp of exponential growth, and we hope that the upcoming budget will be a catalyst for this growth. Regulatory and policy reforms such as the enactment of the Data Protection Bill and setting up a solid and effective data protection authority will ensure a conducive environment for the sector to thrive. We also expect the budget to provide financial incentives to boost innovation and encourage entrepreneurs to adopt risk orchestration solutions to tackle problems such as fraud prevention, data security, KYC compliance, and identity theft.
In the last few years, an increase in mobile internet penetration and innovation in the payments landscape has accelerated our pace toward a digital economy. However, these digital advancements have also generated unprecedented opportunities for criminals to perpetrate fraud. India is expected to have 900 million internet users by 2025, and there is a pressing need to secure our online presence, especially from fraudsters. We are therefore hopeful that the government will provide additional funding, incentives, and tax exemptions to incentivise companies to build a robust data security infrastructure that will fuel the government’s ‘digital India’ vision.
Furthermore, there is a need to focus on initiatives that will help build recognition of the need for robust identity verification systems & also drive consumer awareness to educate the society at large. This will go a long way in ensuring everyone has access to secure digital identities, thus enabling a secure digital economy. This is also in line with the government’s vision of making India a $5T economy in the coming years. All of these measures will not only help the industry but will also benefit the Indian economy as a whole. With Budget 2023, the cyber security industry may finally get the boost it needs to keep up with the ever-evolving digital landscape”.