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Unburden chit fund industry with minimal GST : ICFA

Chennai, Dec 17 (UNI) Incorporated Chit Funds Association (ICFA), Tamil Nadu,
which was a member of the All India Association of Chit Funds (AIACF), New Delhi,
today appealed to the Centre to unburden the Chit Fund industry by levying minimal
GST and amending the legislation for hassle-free procedures with respect to
registration and functioning of the Chit Fund business.
"If the issue of the levy of tax is not addressed immediately it would not only
adversely impact the working of the Chit industry, but would also seriously curtail
the financial inclusion cause, which the industry has been addressing since
inception.
Also, enacting suitable laws that make setting up of Chit Fund companies and
running them a less cumbersome task will make the industry grow" AIACF General
Secretary T S Sivaramakrishnan told reporters here.
''The capacity of this Industry to cater to the lower and middle income households
is quite substantial and will be possible only with the legislative and administrative
support'', he added.
In the scenario of country's functioning of non-banking financial companies eased
without such a tax burden, Chit fund sector also anticipates such a favour from the
government," he said.
Mr Sivaramakrishnan said it should also be noted that in the event of any fraudulent
activities by unorganized finance companies, it was always misquoted as Chit funds
whose failure was a negligible one per cent in reality.
Since this damages the reputation of the industry among public, the ICFA urged the
state government to take required steps to curb such misrepresentations, he added.
On demonetisation, he said though the ICFA welcomed the move, it was not easy
for customers to switch over to cashless transactions and finally resulting in poor
collection of subscriptions thereby affecting the cash flow.
The industry also expects subsequent revolutionary changes that will benefit the
industry's sustainability and growth. ''We expect government's nod for the chit fund
industry to engage themselves in other businesses like selling of insurances and
helping in generation of funds to the industry through fee-based service, he said.
Chit Fund supporting the livelihood of lower and middle income household is
more of a Self-Help Group for them and not a service that could be subject to
any tax.
And with the conversion of Service tax to GST, it would add more to the owes
of the industry. GST up to a maximum of five per cent could only be a help to the
Chits for its survival and deliver good to its dependable customers.
Mr Sivaramakrishnan said the ICFA would be celebrating its golden jubilee
at Tirucharapalli tomorrow.
UNI GV CS 1157
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