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Fintech – Budget 2021

Roadmap for revival of the economy from the pandemic laden year of 2020-21 has been dealt holistically by Budget 2021-22. The 2-step, short-term – long-term revival approach, countering the healthcare concerns and simultaneously concretizing the self-reliant India goal is a welcomed note in the 3rd Sitharaman budget. The Sunrise ‘Fintech’ Sector has garnered heightened reliance by the industries and consumers alike. While the ‘FinTech’ tab on the main page of RBI was a move towards recognizing the importance of the new-age sector – the announcement of developing a Fin-Tech hub will give the fintech players an added participating impetus. Adding to the impetus is the INR 1,500 crore allocation to give a push to the developing digital payments infrastructure. The regulatory sandbox incentives coupled with the promising tone of the budget towards the sunrise sector shows a lot of scope for India to become a major player in the fintech industry over the globe.

Quote by Sidharrth Shankar on Fintech – Budget 2021 published in Mondaq.

FDI in insurance from 49% to 74% – A key change

FDI in insurance from 49% to 74% is a key change, and this will help bring in more investments to scale up business in India. Prior to this change, insurance companies had to be Indian owned and controlled, and with the change foreign ownership and control will now be permitted with safeguards. There is also a proposal to have sufficient number of independent directors, given the sensitivity of the sector. Will help boost the sector particularly given the pandemic and the likely inclination for more insurance cover. FDI in insurance intermediaries has already been permitted upto 100%, so this was an expected next step to provide an effective stimulus for the sector.

Quote by Raj Ramachandran published in The Banking & Finance Post and Fortune India.

Reducing compliances and uncertainty while providing some boost for investments

A step towards easing compliance and reducing uncertainty is that the time limit for reopening income tax assessments will be restricted to 3 years from the six years currently applicable. Only serious offences beyond a non-compliance threshold of 50 lakhs in a year will be subject to a 10-year window for reopening of assessment. Payment of advance tax to meet tax liability for dividend income can be after the declaration of dividend. Dividends to InVITs and REITs will be exempted from TDS. As an incentive for startups, tax holiday and capital gains exemption has been extended by one more year up to 31 March 2022. 

Quote by Raj Ramachandran.

Securities market code to include SEBI Act – Government securities act and depositories act, Budget 2021

The consolidation of securities laws, existing decriminalisation of offences under the Companies Act and the proposed decriminalisation under the LLP Act marks an important move towards making Indian corporate legal framework, simpler, business friendly and ultimately (hopefully) reducing compliance costs.  The securities market code is in line with previous discussions on the NFRA. It marks a step towards streamlining the multiple laws, ordinances, guidelines and regulations. If drafted and executed in a proper manner, it will be helpful to market participants and remove any possible conflicts in the regulatory framework and will provide clarity in policy making to investors and stakeholders.

Quote by Arka Mookerjee, published in CNBC, Moneycontrol, Indian Express, Fortune India, IIFL Group, Yahoo.com, Firstpost.