“Though our country has taken rapid strides towards financial inclusion in the last few years, we are still largely a cash based economy. More than 45% of the country’s bank accounts have no transactions and only 13% Indian adults borrow through formal channels. The creation of a regulatory, social, commercial and infrastructure framework that will help in the creation of the last mile access of financial and other primary services to the larger India is thus one of the primary needs of the subcontinent.
We are optimistic that the upcoming budget will have sops that will push and help amplify efforts in that direction. A key area where we are expecting reforms is relooking at the GST that is levied on services aimed at financial inclusion. GST of 18% on products that have wafer thin margins creates huge burden in the system and needs intervention to make the proposition attractive for incumbents and new players. Also, changing the definition of start-ups to increase the threshold turnover is necessary as financial services include products that swell the turnover, but due to wafer thin margins, our PBT ratios are way lower than normal industries.
As distribution forms a key peg and is one of the primary drivers to create last mile access, it is important to create an environment where the last level agent is incentivized to enter this business. A key area to look at in this direction is the exclusion of TDS on commission paid to retailers working for financial inclusion. A last level agent who deals with the end customers may not have the right means to apply for a no TDS certificate and still bear TDS while earning lower than the minimum slab. We request the government to help us remove the burden of TDS on them.
Every industry including start-ups are thankful to Government for promoting digital payments which strengthens the backbone of all economic activities now. Our well-intended madam Finance Minister Nirmala Ji can help assure viability of hundreds of companies helping build digital payment platforms so that innovation can continue to prosper with right stimulations. Considering efforts, risks, costs and talent required in this industry, a budgetary allocation in some proportion to the costs of these firms would help build the confidence for more minds to continue working in this space.”
- Source – APN News
- Published Date – January 29, 2020