Economy

Budget 2019: Here's what P2P lenders expect from the finance minister

Updated : January 30, 2019 02:57 PM IST

Investments made in peer-to-peer lending can be placed under Section 80C of Income Tax law, which will help both the lender as well as the borrower in saving taxes.

Peer-to-peer lenders lenders are of the opinion that, if P2P is already considered as a source of investment, losses suffered should be considered as capital loss when filing income tax.

Budget 2019: Here's what P2P lenders expect from the finance minister

Peer-to-peer (P2P) lending is a debt financing method between a lender and a borrower, without an intermediary such as a financial institution.

The lending method, however, involves more risk and effort than borrowing from a bank.

P2P lending mostly offers loans from individual investors, who are willing to offer their money on an agreed interest rate. Individuals who like to avail loans, where they are not charged with higher interest rates or will face hurdles in availing loans from banks due to poor credit history, go for peer-to-peer lending.

Here's what P2P lenders expect from the interim Budget on February 1:

Investments made in peer-to-peer lending can be placed under Section 80C of Income Tax law, which will help both the lender as well as the borrower in saving taxes.

Peer-to-peer lenders lenders are of the opinion that if P2P is already considered as a source of investment, losses suffered should be considered as capital loss when filing income tax.

Since credit risk is involved in P2P investments, providing some cushion in case of losses would encourage lenders.

A cap on the lending amount on P2P platforms could be revised from the current Rs 10 lakh for retail investors. The current investment cap does not attract high net worth individuals, who usually invest Rs 2 crore or above.

Most of the SME firms avail loans on the P2P platforms to fund their expansion plans or to meet the working capital requirements. Tax rebates on loans availed by SME firms on the P2P platforms will boost their sentiment.

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