Do away with GST on services by microfinance companies: Industry's Budget wish-list

Microfinance industry body Sa-Dhan in its wish-list for Budget 2020-21 has urged the government to do away with levy of goods and services tax (GST) on the services provided by the sector.

Highlighting the key demands, Sa-Dhan Executive Director P Satish said, "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".

Sa-Dhan said the additional tax burden is currently placed on these low-income clients which is counterproductive to the government's policy on financial inclusion.

"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.

Among others, the industry expects the Budget to help in accelerating lending from the public sector banks to MFIs. "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."