The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has urged the Centre to frame regulations for crowdfunding as the sector is currently unregulated.
In a memorandum to a meeting called to provide suggestions on pre-Union Budget 2022-23 by Union Finance Minister Nirmala Sitharaman, FKCCI president I.S. Prasad said the crowdfunding sector currently is not guided by rules which makes it easier for platforms to exploit public money.
Not a prevalent mode
Currently, SEBI has framed regulations for Equity Crowdfunding, which is not a prevalent mode of raising finance in the country. “There are multiple platforms undertaking donation crowdfunding. With the rising count of such platforms and involvement of public money, it is the need of the hour to bring in regulations around donation crowdfunding,” he said.
Crowdfunding in India has changed the way the social sector operates, be it a non-profit or a social enterprise. Over the years, there have been several scams and money laundering activities that have taken place under the guise of charity and social work, FKCCI said.
FKCCI also urged the Centre to introduce COVID-19 relief for medical reimbursement up to ₹20,000 under the Income Tax Act. Any cost reimbursed to the employee is taxed and will be an additional burden, the FKCCI said.
The trade body has recommended to the Centre to levy zero income tax on individuals earning annual income upto ₹5 lakh, 5% tax on income between ₹5 lakh and ₹15 lakh, 10% tax on income between ₹15 lakh and ₹25 lakh and 22% tax on income beyond ₹25 lakh. Currently, the peak tax rate of 30% is made applicable over an income of ₹10 lakh for individual taxpayers.
Further, levy of surcharge on individuals should be completely abolished, said FKCCI, which can “distort equity and tends to discourage entrepreneurship.”
Mr. Prasad said MSMEs contribute about 60% of the employment and 40% of the exports. But the sector has been struggling due to the price rise of raw materials to meet the customers demands and fluctuation of price. The government should come out with solutions to regulate the price rise.
He also suggested to the Centre to bring back interest subvention schemes to support the MSMEs during the critical condition.
MSMEs went on a one-day strike on December 20 to protest the steep rise in the prices of steel and raw materials including aluminium, copper and engineering plastics.
Regarding relief of GST, Mrs Sitharaman has been urged to reduce the penal interest rate 18% and 24% for delay in payment of GST and wrong input tax credit.
