Pre-Budget Meet: Fintech Firms Seek Sops To Push Digital Payments In Rural Areas

The fintech industry has sought incentives from the government to set up data centres to boost digital payment in rural areas.

Representatives of digital economy, fintech and startups, in a pre-budget meeting with Finance Minister Nirmala Sitharaman, suggested that sops should be offered to the companies that provide infrastructure to merchants in underserved areas to be able to bring them into digital payment system, according to a government statement.

Point-of-sale infrastructure needs to be created in under-penetrated areas as merchants there still haven’t adopted digital payments system, a member present at the meeting said on condition of anonymity.

With the advent of new technologies like artificial intelligence and blockchain, it’s important to have robust data and computing centres in India, the person said. That’s because India, being one of the world’s largest consumers of data, needs to catch up with the data centre infrastructure, the representative said.

Policy Stability For Startups

Rajat Tandon, president of Indian Private Equity and Venture Capital Association, said there should be clarity and consistency in policy for startups to boost confidence of international investors. India “needs to onshore the offshore funds”, Tandon, who was also present at the meeting, told reporters.

One of the ways this can be done is by exempting services provided to alternative investment funds from goods and services tax, he said.

The industry also suggested to create more funds-of-funds—a multi-manager investment that contains different types of fund in one. That would make more funds available for startups.

Tandon said there was also a demand to levy tax on employee stock options while selling and not when they were subscribed by employees.

Lower GST For Mobile Makers

Mobile makers have asked the finance minister to lower GST on feature phones priced below Rs 1,200 to 5 percent from 12 percent, said Pankaj Mohindroo, chairman of India Cellular & Electronics Association.

While this would involve a revenue loss of Rs 700 crore, it would benefit 15 crore Indians, Mohindroo said.

The industry representatives, according to Mohindroo, also suggested to cap basic customs duty on high-end phones.

Other Recommendations

• Rationalisation of minimum alternate tax.
• Training youth in skill development along with international internships and incentivising research & development within India.
• Give tax sops to startups.