Budget 2020: Financial sector players want govt to consider reducing GST on term insurance, streamline KYC norms

Financial sector players have demanded reduction of GST on term insurance for increasing its penetration and streamlining KYC norms to expand financial inclusion. In a pre-Budget meeting with Finance Minister Nirmala Sitharaman, representatives of the financial sector and capital markets also highlighted the need for governance changes in public sector banks (PSBs) with special focus on recommendations of the P J Nayak Committee. Pankaj Malik, EVP & Chief Financial Officer, Fullerton India With ease of doing business being a prime focus area for the Government, the NBFC sector is looking forward to measures in Union Budget to bring NBFCs at par with Banks and other financial institutions on the regulatory landscape. NBFC sector is hoping for the fulfillment of its long-pending demand of exemption from tax deductions on interest paid by borrowers under section 194A of Income-tax Act in line with exemption already available to borrowers of banks. NBFC’s play a pivotal role in providing credit to MSME’s, exemption from a tax deduction on interest payment to systemically important NBFC will help to simplify business processes both for MSME’s and NBFCs. [caption id=“attachment_5936491” align=“alignleft” width=“380”]  File image of Rs 100 notes. AFP.[/caption] The interest paid on arm’s length price by NBFCs to associate enterprise is allowed as a deduction, subject to a ceiling of 30 percent of PBITD, as against no such ceiling for banks or insurance companies. In order to provide a level playing field, we would request for relaxation for systemically important NBFCs under section 94B Income-tax Act. We also seek alignment of minimum loan size requirement for systemically important NBFCs to Rs 1 lakh under SARFESAI Act as against the current requirement of 1 crore. This would enable NBFCs for a speedy recovery by enforcing security interest from defaulting borrowers. Last but not the least, as e-Invoicing is mandatory from April 2020, we are looking at Union Budget for clarity for the banking and finance industry as it will require deploying substantial technology change and enhance internal and external processes. Umesh Revankar, MD and CEO, Shriram Transport Finance The government should reduce direct taxes to drive consumer demand. There should be special tax incentives for homebuyers to revive the real estate demand. It is time to announce the scrappage policy to revive the auto sector. There should be a special incentive for people who voluntarily scrap their vehicles. People who scrap their vehicle should be given a credit note which is transferable/exchangeable so that any customer can use the same while buying the new vehicle. The person who is scraping 15-20-year-old vehicle, most likely buy a used vehicle not the new one, by giving credit note actual buyer of a new vehicle would use the credit note and pass on the benefit to the person who scraps the vehicle. The NBFC’s who are predominantly into financing priority sector, having niche presence, reach and specialisation should be given more scope in priority sector lending target of the banking sector. Amit Gainda, Chief Executive Officer, Avanse Financial Services,NBFC and education financing company Bank Loans to NBFCs for onward lending to education sector should be granted or categorized as priority sector lending for banks. Additionally, along with education, it is important to grant infrastructure status to ‘Education Institutions’ as well. This will allow the sector to offer education loans at lower ROI, thereby making quality education affordable and accessible for deserving Indian students. The sector will also have easy access to capital, which will amplify the quality of infrastructure & educators. This will enhance the country’s economy and create employment and business opportunity for the entire eco-system. Follow full coverage of Union Budget 2020-21 here