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Microfinance Companies Request Exemption from GST in Budget Wish-list

Microfinance Companies Request GST Exemption

Sa-Dhan, an association of Microfinance Institutions (MFIs), has asked the Government to exempt the microfinance industries of GST as this industry offers its services to the low- income group. The Association Executive Director, P. Satish said that imposing GST will be against the government’s policy on financial inclusion.

Mr. P Satish Reiterated that in case of loans from the banks, there is no GST (Goods and Services Tax). So, why should we charge GST from the financially backward section of the society? The industry expects that in this budget the government should show a roadmap in accelerating the process of lending from public sector banks to the MFIs.

This is coming in the form of gradual progression with steps aiming in the direction of inclusion of the economically backward section of the country. The Government is aiming to help MFIs to gradually take over the borrowing from the Public Sector Banks. Earlier the PSBs had a share of 22% of the total borrowing made in the industry to microlenders. This number has been reduced to 12% in FY 2018-19.

Financial Inclusion Funds of Rs 2000 Crore is being made accessible to commercial banks, RRBs and few other commercial institutions. Sa-Dhan has asked NABARD, SIDBI, and other subsidiaries to increase lending to MFIs.

Read Alos: Traders Want Government to Simplify GST & Relax Loans Budget 2019: Traders Looking Eagerly towards Government to Simplify GST, Tax Breaks, and Economical Loans. The current GST system enforced by the central government

It has asked for a special fund for the sector’s SRO and had asked the allocation of funds to SROs will help in spreading awareness in the microfinance sector. They can also conduct a workshop for the purpose of spreading awareness about lending through the microfinance sector.

As per data by Sa-Dhan, the credit portfolio of all such microfinance lenders stood at Rs 1,99,441 crore as on September 30, 2019.

Disclaimer:- "All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check."

Published by Rani Anupama (Ex-employee)
MBA graduate, a published author, an artist and a CBT Practitioner, Rani Anupama Jha is working in SAG Infotech as Content Writer, She has a keen interest in the corporate world and an avid follower of the latest news and updates. She likes to write articles on various topics with well researched facts and inputs. View more posts
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