Lok Sabha Question No. 2147 (UNSTARRED), answered on 2024-08-05
Subject: Tax Incentives to Fintech Sector
Ministry: FINANCE
Asked by: Thiru Dayanidhi Maran

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA

## UNSTARRED QUESTION NO. 2147

TO BE ANSWERED ON MONDAY, AUGUST 5, 2024 SHRAVANA 14, 1946 (SAKA)

## TAX INCENTIVES TO FINTECH SECTOR

## 2147 THIRU DAYANIDHI  MARAN:

Will the Minister of FINANCE be pleased to state:

- (a) whether there are any current tax incentives or waivers in place for companies operating within the fintech  sector  and  whether  the  Government  has  any  plans to  introduce  tax  cuts  or  waivers  specifically aimed at fostering the growth and adoption of emerging technologies in the fintech industry in India, if so, the details thereof;
- (b) whether there are particular emerging technologies within the fintech sector that the Government is focusing for potential tax incentives, such as blockchain, AI, or digital banking innovations and if so, the details thereof along with the criteria the companies will need to meet to be eligible for any proposed tax cuts or waivers for emerging technologies in the fintech sector;
- (c)  whether the Government has conducted any impact assessments to predict the potential economic and industry benefits of introducing such tax incentives, and if so, the details thereof; and
- (d)  whether  the  Government  is  engaging  with  fintech  companies  and  other  stakeholders  to  understand their needs and challenges regarding tax policies, if so, the details thereof?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (d) : Phasing out the exemptions and incentives available to various taxpayers and simplifying the  tax  structure  is  the  stated  policy  of  the  Government.  Accordingly,  while  there  are  no  specific incentives, exemptions or deductions for the fintech sector. Starting from the Finance Act, 2016, the corporate tax rates have been gradually reduced. Vide Taxation Laws (Amendment) Act, 2019, an option has been provided to corporates to pay tax at concessional rate of 22% if they do not avail specified deductions or incentives.

Further, Under Section 80IAC of the Income Tax Act, 1961 ('the Act') with a view to providing an impetus to start-ups and to facilitate their growth in the initial phase of their business, a deduction of 100% of the profits and gains derived by an eligible start-up from a business involving innovation development, improvement of products, processes, or services, or a scalable business model with a high  potential  of  employment  generation  or  wealth  creation  is  available.  This  benefits  start-ups engaged in various businesses including  export  of  services.  The  benefit  of  100%  deduction  of  the profits derived from such business as be available for a period of three consecutive years out of ten years  beginning  from  the  year  the  start-up  is  incorporated.  Such  benefit  is  to  be  provided  as  per provisions of this Section. Certain benefits have also been provided for carrying forward  losses of eligible start-ups under section 79 of the Act.

GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising of representatives from both the Centre and the States/UTs. There is no recommendation from the GST Council regarding tax cuts or waivers specifically aimed at  the fintech industry in India.

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