Financial sector firms pitch for tax break, GST reduction at pre-Budget meeting with Nirmala Sitharaman

New Delhi: Financial sector players on Monday 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. Speaking to reporters after the meeting, Finance Secretary Rajiv Kumar said a number of suggestions came from various financial sectors including banks, insurance companies, non-banking financial companies (NBFCs) and housing finance companies. “There were taxation suggestions. We have taken note of it. Taxation concern would be addressed in given fiscal space. Inflation is still benign, credit growth is also happening. All these factors will be kept in mind,” he said.

Union Minister for Finance and Corporate Affairs Smt. @nsitharaman holds Pre-Budget Consultation with representatives of Financial Sector and Capital Markets.

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— Ministry of Finance (@FinMinIndia) December 16, 2019

To give a boost to Indian markets, the representatives from the financial sector and capital markets submitted several suggestions concerning enhancing credit offtake from banks, governance, risk capital issues, improving functioning and alleviating stress among NBFCs, an official statement said. Besides, they made a case for promoting leasing by reducing GST, reduction of GST rates on term insurance for increasing its penetration and to provide easier credit to digitally active users by streamlining KYC norms, it said. Demand for GST reduction comes days ahead of the GST Council meeting to be scheduled on 18 December. Suggestions were also received for enhancing support from private banks to the Stand-Up India scheme, it added. SBI Chairman Rajnish Kumar said suggestion with regard to taxation and improvement in credit growth were made. “We have made a suggestion to raise tax break on NPS (New Pension Scheme) from Rs 50,000 to Rs 1 lakh and increasing the age limit for the Atal Pension Yojana to 50 years,” Pension Fund Regulatory and Development Authority member (finance) Supratim Bandyopadhyay said. Finance Industry Development Council Chairman Raman Aggarwal said overdependence of NBFC to banks needs to be rectified and funding sources need to be diversified. The industry has requested that a re-finance window for NBFC needs to be created under NABARD or SIDBI, he said. Along with the finance minister, the meeting was attended by Minister of State for Finance Anurag Thakur, Finance Secretary Rajiv Kumar, Economic Affairs Secretary Atanu Chakraborty, and Revenue Secretary Ajay Bhushan Pandey, and other senior officials of the finance ministry. Major stakeholders of the financial sector and capital markets participated in the meeting including RBI Deputy Governor N S Vishwanathan, SEBI whole-time member Madhabi Puri Buch, LIC Chairman M R Kumar, Kotak Mahindra Bank Managing Director Uday Kotak, Max Life Insurance Managing Director Prashant Tripathy, among others. Follow full coverage of Union Budget 2020-21 here