Budget 2022 expectations: Fintech seek tax benefits, clarity on crypto

Budget 2022 expectations: Tax incentives to consumers and merchants, clarity on cryptocurrency and ease of doing business, here's what Fintech industry wants from finance minister Nirmala Sitharaman.

All eyes will be on Finance Minister Nirmala Sitharaman as she unveils the Union Budget 2022 on February 1.

The financial technology (fintech) industry has had a phenomenal year, with Covid restrictions forcing people to stay in and manage everything from home.

The government has been constantly pushing for digital transactions and the use of technology such as the united payment interface (UPI), which was one of the objectives of announcing demonetisation in 2016.

Since then, smartphones have become a valid mode of financial transactions. Mobile wallets and other forms of digital payments happen via smartphones.

Fintech companies have also been using smartphones to provide instant financial services to users like approving loans, enabling stock market trading, and so on.

Around 44 billion digital payments were recorded across India in 2021.

Here's what the Fintech industry expects from Budget 2022

"The year 2021 was a phenomenal year for the Indian fintech and startup industry. With 40+ startups attaining unicorn status in the year, the startup industry witnessed tremendous growth.

India saw a continued explosion in digital payments and increased adoption of digital modes of payment," Murali Nair, president-banking at Zeta.

"Given the surge in digital payments, the budget should consider offering tax incentives to consumers, merchants and ecosystem enablers.

In order to accelerate innovation in the fintech space, the budget should support more partnerships between banks and fintech- this will aid in pushing the economy towards financial inclusion.

We expect the budget to include supportive initiatives to provide a modern payments framework which can ensure high-quality performance while gearing up for the next wave of transformation," he said.

"While the Reserve Bank of India (RBI) has set the regulatory ball rolling for innovations like UPI and account aggregator, the budget can encourage uptake of these technologies in the financial sector through partnerships with digital service providers either by direct funding or tax incentives," he said.

In the spirit of tech innovation and digital transformation, we hope, through the union budget 2022-23, the government will bring game-changing reforms, new policies, and regulations that will offer relief and tax sops to MSMEs and the overall startup ecosystem.

In 2022, we expect that the government to focus more on the development of digital infrastructure to enhance customer experiences, credit quality, and streamline the growth of financial entities in FY22-23.

Whether it be personal taxes, corporate taxes or capital gain taxes, the regime should be made easier and progressively lower as the government has themselves stated earlier.

Focus should continue to remain on more transparency, greater compliance and finally easier rules of doing business.

Aditya Damani, Credit Fair

"The government needs to play a fine balancing act between spurring economic growth while consolidating its finances.

We hope it’s a fiscally responsible budget since inflation has been rising and that could lead to higher interest rates which would be a headwind for fintechs.

Subdued interest rates especially in Government bonds and Fixed deposits will be needed to spur capex, SMEs and fintech lending. As a creator of Alternative Assets we hope the Budget will nudge individuals to diversify their portfolio and enable pension funds to invest in a wider range of fixed income or equity assets that have been created by fintechs."

Nikhil Sahni, division president, South Asia, Mastercard

A few players feel that the government’s timely measures have supported the recovery of the MSMEs as they were severely impacted by the Covid-19 pandemic, but this momentum should be continuous to support their recovery.

“We should continue the momentum by empowering small businesses with innovative digital financing solutions like supply chain financing, subsidising loan insurance for financial institutions which service MSMEs, and continue to simplify GST slabs to further strengthen the sector.

Incentivising asset-light innovations can enable millions of small business owners to adopt and benefit from digital payments,” said Nikhil Sahni, division president, South Asia, Mastercard.