In its wishlist from the Budget 2020,the industry body of microfinance sector expects to do away with GST charged on services offered by the sector.
The demands have been highlighted by P Satish who is the Executive Director of microfinance body Sa-Dhan and who says "MFIs (microfinance institutions) offer different services to the microfinance clients and we request the Government of India that Goods and Services Tax (GST) should be done away (on the services) with since it is a service to the low income segment of the population".
The body says the implication of taxation on lower income group is rather conflicting to the government's policies that is on its financial inclusion mission."There is no GST on loans from banks, hence the same should not apply to loans taken from MFIs," Satish said in the wish-list of the MFIs.
At the same time, the body expects advancement of financing from PSBs to microfinance institutions such that there is no dearth of capital at their hands."In gradual deceleration, in 2018-19, it came down to 12 per cent of overall borrowing from 22 per cent in 2017-18. We request the finance minister to bolster plans for adequate fund for PSB that will be utilised for the microfinance sector."
For the purpose of on-lending to MFI, there has been a call made for increased budgetary allocation for institutions including SIDBI, NABARD and their subsidiary units.
Also, the microfinance body expects to get access to Rs. 2000 crore financial inclusion fund. Also, the sector has asked of a special fund for the sector's self-regulatory organisation (SRO) and said allocation of fund through the RBI to SROs will help in spreading awareness and conduct .. workshops for the microfinance sector.