Budget 2019 expectations: Fintech firms demand tax benefits to promote cashless economy
Fintech firms have demanded from the finance minister Nirmala Sitharaman to announce tax benefits to promote cashless economy in India.
As budget 2019 is fast approaching, expectations of the industry have started to surface. In this line, Fintech firms have demanded from the finance minister Nirmala Sitharaman to announce tax benefits to promote cashless economy, when she stands to table the Union Budget 2019 on the floor of the parliament on July 5th. Taking a cue from the Chinese economy, the industry insiders are of the opinion that the economy grows leaps and bounds when many new people get additional spending power.
Speaking on the demand Sameer Aggarwal, Founder & CEO, RevFin said, "The first step is to do a voluntary disclosure of cash scheme, with no tax implications. This will put money into banks. Second is to create a scheme (like SEZs) where small traders below certain earning should be given tax exemption from income earned through the digital medium in certain geographical regions. Geography can be defined on the basis of areas of high cash utilisation and low bank presence."
Giving an example of Chinese economy Mayank Bidawatka, Co-founder at Vokal said, "An economy grows leaps and bounds when many new people get additional spending power. We’ve seen that happen in China and the positive effects of disposable income increasing. The amount collected from income tax is very low in India. A very small percentage of the population pays this tax and most non-salaried people find smart ways to avoid paying this tax. Of the salaried, majority of the people paying tax are in the lower rung. As a result, the have-nots get axed. Instead, if we could increase the lowest tax bracket from 2.5 lakhs to 6 lakhs, that could help increase disposable income for the majority." He said that taxes could shift more towards consumption rather than on earnings. Even abandoning income tax for people and increasing it on luxury consumption could have a huge effect in giving a fillip to the economy.