As the Union Budget 2020-21 round the corner, Ashok Mittal, CEO of New Delhi-based Fintech Prest Loans shares his Budget wishlist with SH. Here is Mittal’s first-person account:
By Mrinmoy Bhattacharjee
Reintroduce Infrastructure Bonds
The government had provided a deduction of up to Rs 20,000 in respect of subscription to notified long-term infrastructure bonds in the year 2011 for a couple of years. To boost the infrastructure sector, the government should consider re-introducing infrastructure bonds with a higher cap of Rs 50,000 for the deduction.
Taxability of Employee Stock Options (ESOPs)
Currently, the ESOPs are being taxed at the time of getting exercised hence the ESOP beneficiary has to pay tax while getting the ESOPs converted to equity but not really selling them. This causes a cash outflow without getting the cash inflow. Hence the ESOPs should be taxed when they are encashed or sold and the person really gets the cash inflow. This will be a big boost and support to the start up the ecosystem.
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Bank Lending to NBFCs for On-Lending to Priority Sector to be Treated as Priority Sector Lending for Banks
RBI had allowed all banks lending to NBFCs for on-lending to the priority sector, to be treated as priority sector lending by banks. This gave a huge incentive to banks to lend to NBFCs. While it ensured sufficient bank funding to NBFCs at a reasonable cost, it also facilitated banks to meet their Priority Sector Lending (PSL) targets. This was abruptly withdrawn in 2011. However, RBI re-started this arrangement recently, but only up to March 31, 2020, and on a very limited scale (only up to 5% of PSL by banks).
We expect that this arrangement of treating bank lending to NBFCs for on-lending to Priority sector to be treated as PSL for banks to be extended at least by one more year if not made permanent. Besides, we expect that the limit to be increased to at least 10% of the total PSL by banks.
