Press "Enter" to skip to content

GST relaxation for SMEs and more regulatory reforms for FinTech Sector from Budget 2024 : Optimyze Finance LLP

New Delhi: As the eagerly awaited Interim Budget 2024 approaches, businesses of all sizes, from individuals to industries, are holding high expectations from the government. “Among them, Small and Medium Enterprises (SMEs) are particularly hopeful for significant relief, primarily in Goods and Services Tax (GST) provisions”, says Kanika Bali, Partner, Optimyze Finance LLP, a new age professional services firm based in UK and India.

“A key demand from the SME sector is an increase in the minimum revenue threshold for mandatory GST registration. Experts suggest raising it from Rs 20 lakhs to Rs 50 lakhs, which would assist small-scale suppliers in minimizing compliance costs. Furthermore, clear guidance on the necessity of GST registration for businesses focused on exports is deemed essential, given their supplies are zero-rated. Simplifying these processes would not only reduce compliance costs but also enhance operational efficiency for small businesses and exporters”, she adds.

Optimyze Finance LLP is bringing automation in global finance. The company is leveraging FinTech coupled with their domain expertise for the benefit of SMEs, Startups and NGOs globally, enabling them to make informed decisions, manage risks, and identify growth opportunities, apart from reducing time and cost.

Talking about the Fintech Sector, Manu Gupta who is heading the UK operations of the company, mentioned that the sector is looking forward to more regulatory reforms. In the rapidly evolving landscape of India’s fintech sector, anticipation is high for substantial movements in the upcoming Interim Budget. Fintech companies, having experienced regulatory reforms in the past year, are looking forward to further support for financial inclusion and empowering micro, small, and medium enterprises (MSMEs). The sector, recognized as one of the fastest-growing in the world, expects the government to foster its growth.

He also emphasized the need to create a dedicated Fintech Credit Fund. The Digital Lending Association of India (DLAI) seeks support in the creation of a dedicated India Fintech Credit Fund (IFCF). This fund aims to provide accessible financial assistance to fintech companies at affordable rates, encouraging their horizontal expansion beyond Tier-4 cities. The DLAI emphasizes the potential benefits, including support for women, inclusion of thin filers, and expansion of formal finance. Such a fund would undoubtedly contribute to the overall development of the fintech ecosystem.

“Another critical area of concern for Fintech is Taxation. We propose tax benefits on total expenditure for fintechs involved in the financial empowerment mission. Specifically, a 5% GST rate for startups working for last-mile empowerment is suggested, along with a GST subsidy to ease the reach of financial services. Fintech startups also advocate for a waiver of GST on financial services from BC outlets, Income Tax relief for seven years, and reduced import duty on essential financial services devices”, says Fatima Naqvi, Partner, Optimyze Finance.

“While units in the International Financial Services Centre (IFSC) enjoy various tax benefits, there is a call for extending these advantages to other industries”, she adds. The tax exemptions on Corporate tax, a 10-year tax holiday, and reduced Minimum Alternative Tax (MAT) have significantly contributed to the profitability and growth of businesses in IFSC. Extending these benefits beyond the IFSC units is seen as crucial to unlocking the complete potential of Gift City.

Relaxation in Cryptocurrency Taxation: In the realm of cryptocurrency, there are specific demands for relaxation in taxation. This includes reducing the Tax Collected at Source (TCS) from 1% to 0.01%, allowing offsetting and carry forward of losses from the sale of Virtual Digital Assets (VDAs), and treating income from VDAs at par with other capital assets. These proposals aim to foster a conducive environment for the cryptocurrency market and encourage innovation in the sector.

As the government prepares to unveil the Interim Budget 2024, SMEs and the fintech sector eagerly await measures that can drive growth, reduce complexities, and enhance financial inclusivity. The expectations revolve around simplifying GST provisions, creating dedicated funds for fintech, extending IFSC benefits, and providing a conducive environment for the cryptocurrency market. The government’s response to these expectations will undoubtedly shape the trajectory of these sectors, impacting the broader economic landscape.