Budget 2020 Wishlist: Improved access to credit and incentives for digital payments, housing, and long-term wealth generation

Budget 2019 introduced Section 80EEA to stimulate demand in affordable housing. It allows an additional deduction of Rs 1.5 lakh on home loan interest component, over and above the deduction available under Section 24b. However, Section 80EEA is only applicable on home loans availed by first time home buyers in the current financial year for purchasing housing properties with a stamp duty value of up to Rs 45 lakhs. With the continuing slump in the housing sector, extending Section 80EEA to FY21 can play a major role in reviving demand in the housing sector.

The prime objective of purchasing a life insurance policy is to have a replacement income for dependents in the event of the insured’s untimely demise. Ideally, one’s life cover should equal 10-15 times of his annual income. Buying a term insurance policy is the best way to get such large life covers as their premiums are very low. However, most people confuse insurance with investment and thereby, buy life insurance policies with very little cover.

Budget 2020 should introduce a separate section for term insurance plans outside Section 80C. A separate section will incentivise taxpayers to buy term policies and thereby, get themselves adequately covered.

The withdrawal of Aadhar-based e-KYC has adversely impacted the customer on-boarding process in the financial sector. Currently, Aadhar-based e-KYC is only allowed for opening bank accounts. The return to paper-based offline KYC for availing other financial products has increased both the turnaround time and customer acquisition cost. The increased turnaround time is especially impacting those requiring loans to meet their financial emergencies. Hence, this year’s budget should make some policy announcements towards allowing Aadhar-based eKYC for customer on-boarding of loans, mutual funds, credit cards, insurance, etc. This will ensure seamless access to financial products and expedite financial inclusion.

The decision to waive off MDR charges on UPI and RuPay payments was aimed at promoting digital transactions. The cost associated with digital payments is proving to be the main obstacle in the widespread adoption of digital transactions by small traders and the informal sector. However, transactions through other payment gateways are still attracting steep MDR charges. Hence, I would like Budget 2020 to announce two percent GST concession to merchants accepting digital payments. Doing so would create a strong incentive for merchants and traders to adopt digital payments and also ensure a more level playing field in the digital payment ecosystem.