Page 37 - Banking Finance September 2022

ARTICLE

other loans and often leads to misinterpretation of the industry is poised to become a $99-billion market by 2024,
customer's actual pay burden by other potential lenders, driven by consumer demand. At the same time, industry
causing the customer to be over leveraged when approved. experts say, BNPL will become the fastest growing online
payment method, from a 3 per cent share in 2020 to 9 per
It is the lender's responsibility to ensure proper process is cent in 2024.A Q4 2020 BNPL survey predicted that BNPL
followed before lending credit, which include taking the would grow by 65.5 per cent in India, reaching a value of
customer's data, checking their bank statements, their KYC, $11,570.7 million in 2021. The adoption of this payment
getting their PAN number and identification. This helps to mode is expected to rise at a 24.2 per cent CAGR from 2021
establish that the consumer is one who he says they are; to 2028, taking the gross merchandise value of BNPL in India
then evaluate their credit burden, and lend them an to $52,827.2 million by 2028, from $6,990.5 million in
appropriate amount. If fintech players fail to comply, the 2020.Consumer demand for e-commerce services increased
result can be detrimental to the total credit culture. due to the lockdowns.

When the customer stops paying, the RBI's prescribed code BNPL helped customers break down large expenses into
of conduct for collections needs to be followed. But smaller, interest-free EMIs, rather than having to dig deep
companies that do not treat BNPL as a credit product may into their wallets. BNPL not only eased purchases of daily
not be following this code of conduct, leading to customer essentials but even brought aspirational products within
harassment, involvement of third party collection vendors, reach.Due to low credit card penetration in India,
who may cross the line, due to lack of proper monitoring. supplemented by traditionally strict eligibility criteria to avail
formal finance, there exists a sizable under-served
There are quite a few red flags that can be ironed out with population with little or no credit histories. This situation
a proper regulation and plugging the loop holes in the perpetuates a cycle wherein people seeking formal credit
system. are turned down due to unavailable or inadequate credit
scores. With BNPL relying on alternative data sources for
Future of BNPL: underwriting, new-to-credit customers are integrated into

According to Goldman Sachs, the Indian e-commerce the country's formal financial ecosystem.

IT department disallows Rs. 4.5Lakhs TDS, irks ITAT
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has come down heavily on the I-T department for its
failure to take cognizance of a tax deducted at source (TDS). The TDS was on professional income earned by a tax-
payer and, consequently, the I-T department also raised a tax demand on her - along with penal interest. In the
recent case, which was heard by the ITAT, the taxpayer Kirtida Rameshchandra Chandarana had duly claimed as a
deduction a sum of Rs 4.5 lakh as it had been deducted at source, against professional fees paid to her. For the
financial year 2012-13, the year in dispute, she deducted the TDS and the advance taxes paid by her against her final
I-T liability and claimed a refund of Rs 19,816.
However, she was sent a 'rectification' order. The I-T assessing officer denied the TDS sum and an aggregate penal
interest figure of Rs 79,539 was also raised on her. The Commissioner (Appeals) also upheld this course of action,
despite the TDS being reflected in her Form 26AS. The ITAT bench - composed of judicial member Aby T Varkey and
accountant member Gagan Goyal - explicitly expressed their displeasure, especially as a rectification order can be
issued only if there is a mistake apparent on record.
The bench pointed out, "The taxpayer filed her I-T return on the basis of records generated by the tax department
itself, viz Forms 26AS and 16A. These are documents which have been processed and issued by the tax department
itself, on which the taxpayer has relied. How can there be a case of mistake apparent from record? We declare this
whole action of the Centralised Processing Centre at Bangalore and in turn jurisdictional I-T officer is 'bad in law',
hence it is set aside." The ITAT gave directions that the taxpayer should be given full credit of the TDS claim, be
granted refund (together with interest to be paid by the I-T department for the delay) and be refunded any other
money she may have deposited after the issue of the rectification order.

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