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From asking government to issue tax free “Aatmanirbhar bonds” to retail investors in these pandemic times to allowing special tax breaks under Section 80C for life insurance premium payments—-Banks, insurers and non banking finance companies (NBFCs) on Tuesday came up with several interesting suggestions that Finance Minister Nirmala Sitaraman could consider for her next budget in February 2021.
At the pre-budget discussions that Finance Minister Nirmala Sitaraman had with chiefs of financial sector players through video conferencing, it was also suggested that NBFCs be allowed to issue secured bonds/NCDs “on tap”; gold loan companies be permitted to issue credit cards and exempt NBFCs registered with RBI and classified by the central bank as deposit taking NBFC and non deposit taking systemically important NBFCs from the provisions of Tax Deduction at Source (TDS) on interest income.
Finance Industry Development Council (FIDC) Co-Chairman Raman Aggarwal told BusinessLine that the industry body made several suggestions around liquidity support, income tax and MSMEs as regards NBFCs. FIDC is a self regulatory organisation representing NBFCs.
Aggarwal said that it was submitted that NBFCs be included in the list of eligible sectors under RBI’s On Tap TLTRO scheme. Also, the Partial Credit Guarantee scheme 2.0 should also include bank lending to NBFCs by way of term loans, as small NBFCs do not issue bonds/NCDs, he said. FIDC has also pitched for TDS exemption on payouts by Securitisation trusts.
LIC Chairman M R Kumar is understood to have suggested that a special window be carved out under Section 80 C of income tax law for incentivising insurance premium payments, Citi India Chief Executive Officer Ashu Khullar is understood to have suggested that government come up with tax free “Aatmanirbhar bonds” to retail investors besides allowing insurance companies to invest monies in private limited companies.
It is felt that mop up from Aatmanirbhar bonds could come in handy for the government in channelising funds to various schemes under Aatmanirbhar package already rolled out as stimulus to the economy..
On insurance, industry players wanted encouragement via tax breaks for term insurance and also pointed out that a goods and services tax( GST) of 18 per cent on insurance premium was on the higher side and needed to be reconsidered, sources said.
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