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Budget 2018
Feb 01, 2018 07:36 PM IST | Source: Moneycontrol.com

Budget 2018: 10% Long Term Capital Gain tax to benefit P2P lending players

The government is also committed to taking special policy measures to enable startups to attract foreign capital through hybrid instruments

Raghavendra Pratap Singh

The Budget 2018-19 has been extremely encouraging for the startups, mainly operating in the Fintech sector. The government has shown a keen interest in evaluating the policy framework and formulating an institutional model to create a conducive environment for the development of the industry. The government is also committed to taking special policy measures to enable startups to attract foreign capital through hybrid instruments. Besides, government’s willingness to promote the use of blockchain technology to encourage digital economy may prove to be a growth catalyst for the P2P lending industry.

The government has made higher budgetary provisions for enhancing the digital and IT infrastructure in the country. It’s also reiterated its commitment to transforming India into a knowledge economy and a digital society by extending higher budgetary support to the Digital India programme. Financial services industry is expected to draw unparalleled benefits from the digitalisation. The penetration of financial services is likely to improve significantly, along with the prevalence of digital payment systems.

Imposing 10% long-term capital gain tax on equity investments may create some level playing field for the P2P lending industry. So far, the favourable tax treatment on long-term gains on equity investments made them a preferred choice for the investors. Now, those who are ready to take higher risk for earning better returns may also think of investing in P2P lending projects which have a better risk profile as compared to equity-oriented investments.

Overall the Budget 2018-19 has been a balanced-one. It has made more allocations to infrastructure, agriculture and allied sectors. Higher spending on the rural economy may eventually push the overall economic growth—a big positive. Nonetheless, this Budget has not resolved issues revolving around the tax on funds received by the startups—in excess of fair value of the enterprise—from the angel investor.

(Writer is the Co-founder, i2ifunding, a peer to peer lending platform)

India Union Budget 2018: What does Finance Minister Arun Jaitley have up his sleeve? Click here for live Budget 2018 news, views and analyses.
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