P2P industry expectations from Budget 2019
Attracting angel investments
“Our industry definitely needs proper solution on Angel Tax. It will help to boost start-ups whilst attracting angel investments sans tax implications,” says Bhavin Patel, Co-Founder & CEO, LenDenClub. From this Budget, we also “expect appropriate initiative by the Central government on KYC mechanisms for the fintech space.” Patel says the P2P industry is expecting a long-term centralized vision and the government can encourage investment in the P2P segment by creating tax-free slabs for investors which in turn will help small and marginal borrowers.
Better financial inclusion
“While a great boost to the P2P industry would be via the regulator easing lending caps, we look forward to a critical role from the finance ministry for better financial inclusion by extending SOPs to retail investors,” says Dhiren Makhija, CEO, Cashkumar. “This could be in the form or a certain percentage exempt via Section 80C and also flexibility of handling defaults under a capital loss. These steps will ensure a great reach as an asset class and also better credit access to both individuals and MSMEs,” adds Makhija.
Mobilising individual savings
“One of the simplest ways to do it is to make investments in P2P lending, tax free, akin to investments in certain mutual funds and other such investments can, perhaps, be placed under Section 80C of Income Tax law,” says Rajat Gandhi, Founder & CEO, Faircent.com.”A lender should be allowed to set off or carry forward his losses as currently prevalent in other forms of investment. The same set of rules that exist for short-term and long-term capital losses can apply and there need not be any new provisions, especially for P2P.”
Making P2P as attractive as MFs
“It would be great if our industry is also given tax exemptions under the Income Tax Act,” says Mukesh Bubna, Founder, Monexo. Bubna says tax exemptions can solve MSME and consumer credit woes as “P2P will become more attractive for lenders. More supply of lenders will lead to more credit going into the economy.”
End credit woes of MSE
“The Interim Budget is the last opportunity for NDA government to win back trust of micro & small enterprises and start-ups. Getting access to institutional credit has been one of the major problems of the MSEs. It’s time the government looks at alternative financing option like P2P lending to solve the credit crisis,” says Raghavendra Pratap Singh, Co-Founder, i2ifunding.MSEs make about 65 per cent of the enterprises of India and contribute around 20 per cent of the overall GDP. Singh believes P2P lending platforms can channelize idle wealth of Indian middle class. “To encourage retail investors to participate more in lending activities at P2P lending platforms, the interim Budget should waive off tax on the interest earned by an individual investor through P2P lending.”
Tax benefits for startup employees
“The resource bandwidth for a start-up to comply with regulations is limited during the initial period. Our primary concern is to acquire funds and scale rapidly to gain traction in our niche segment,” says Abhishek Gandhi, Co-Founder, RupeeCircle.comHowever, a game changing reform would be “tax benefits for startup employees which will to an extent solve the dearth of high-quality talent in start-ups,” adds Gandhi.