Pranjal Kamra: With the election of the new government, the old tax regime should merge into the new tax regime

On February 1, Finance Minister Nirmala Sitharaman unveiled the Interim Budget, weeks before the Lok Sabha prepares to go for elections between April and May. The full Budget of 2024 would be presented in July after the new government comes into power.

Sitharaman has left the tax rates and slabs unchanged for both old and new income tax regimes for 2024-2025. For an income of up to Rs 3 lakh, no tax would be applied, for an income between Rs 3 lakhs - Rs 6 lakhs, a tax of five percent would be applicable.

Under the new regime tax slabs, for anyone, whose income is between Rs 6 lakh - Rs 9 lakh, Rs 9 lakh - Rs 12 lakh, Rs 12 lakh - Rs 15 lakh and an income of Rs 15 lakh and above, the taxes would be applicable at 10 percent, 15 percent, 20 percent and 30 percent.

Under the old regime tax slabs, income up to Rs 2.5 lakhs is exempt from taxation. For those whose income is in between Rs 2.5 laksh to Rs 5 lakhs, they would be taxed at a rate of five percent.

Income from Rs 5 lakhs to Rs 10 lakhs would be taxed at 20 percent. Income above Rs 10 lakh is taxed at 30 percent.

Pranjal Kamra, chief executive officer, Finology Ventures said, “If the new tax regime is meant to simplify the complications of the old tax regime by being in existence, it further leads to complications. We all know how important the government thinks that the national pension scheme is. Thereby, it should also get a special provision in the new tax regime the way it got in the old tax regime.”

Edited excerpts

What are your thoughts about the Interim Budget 2024 with respect to the income tax regime?

Mixed thoughts specifically regarding the tax slabs. For example, if inflation is six percent, it means that the common man now has six percent more expenses and by virtue of it, probably six percent higher income. So, slabs should at least be adjusted as per inflation so that I don't end up paying more taxes and glory is taken saying no changes in tax lab.

Compared to Budget 2023, how did Interim Budget 2024 fare?

For a common man, mostly a budget means whether he or she is getting any additional relief. Even though it's an interim budget, more clarity is (needed on) how we are going ahead in terms of merging the old tax regime and the new tax regime because two regimes existing parallelly doesn't make a lot of sense.

If the new tax regime is meant to simplify the complications of the old tax regime by being in existence, it further leads to complications. We all know how important the government thinks that the national pension scheme is. Thereby, it should also get a special provision in the new tax regime the way it got in the old tax regime.

So I think these were the two minor misses, but I'm sure that further down the year when the full budget is unveiled, this might be corrected.

2023 has been quite a year for finfluencers. Securities and Exchange Board of India (SEBI) released a consultation paper after ASCI revised its influencer guidelines requiring finfluencers to be registered with SEBI. What sort of an impact have the guidelines had on your modus operandi as a finfluencer?

It has been a little different for us because we are SEBI registered since 2018. RIA (Registered Investment Advisor) regulations are so tough that comparatively these finfluencer guidelines are nothing. I'm someone who already complies with the RIA regulations. And in comparison to those, I don't feel any additional burden.

I think there should be some formal regulation for finfluencers because we need to understand the intent behind the RIA regulation. When they came in 2013, it was to actually regulate the mode through which advice was rendered back then. Back then, the primary mode was websites and physical consultations.

Today, the primary mode through which financial awareness or consulting is given is through finfluencers and social media. The existence of those regulations defeat the purpose if now a new regulation does not cover the primary mode of delivering these consultations today. So I welcome these steps and I think not just guidelines, there should be a formal regulation.

SEBI took action against a few of the finfluencers like PR Sundar. How have such incidents impacted the brand collaborations that came your way?

I take very few brand collaborations offers. In terms of offers also, there has been a reduction. But for the good, because I don't see reputed brands not approaching us. I only see brands that were operating in the regulatory grey area now not being so aggressive.

So I think for some finfluencers, it could have led to some monetary distress. But as a regulated entity, we couldn't touch a lot of brands. So it does not impact us financially.

Could you name some of the brand collaborations that have come your way?

Previously, we saw a lot of betting, gaming apps, crypto apps, stock market games etc approaching us.

We would receive offers like speaking good things about an IPO. If a quarterly result came, requests like 'could you tweet something good about the quarterly results etc?' would come my way. And I would deny it.

When, the next day, I saw YouTube or social media filled with the same kind of videos or tweets, it did hurt. So, those offerings in itself have reduced.

But otherwise, safer options like promoting a platform and not promoting a particular scrip or an asset is something we look at. If one wants to buy insurance, I would never promote a particular brand.

So if it's a platform and where the end responsibility is with a regulated entity, say, if I'm buying HDFC life insurance, it shouldn't matter much whether I'm buying it from Paisa Bazaar, Policy Bazaar or some other website. So I'm more comfortable with these marketplaces rather than promoting the end product.

With the brand collaborations requests that you are receiving, what are the precautionary steps you take to avoid being misled or misguided or coming under the radar of SEBI?

We are all under the radar and rightfully so. Rather than being fearful or feeling nervous about it, with or without these guidelines, what we have to work with is common sense.

There are three or four basic guidelines that all financial intermediaries follow. As influencers, we should also follow. First, if you are earning by promoting the product, disclose it. So I think disclosure is very basic. In a lot of ways, the guidelines also repeatedly talk about it.

Second, avoid front running (forward trading or tail-gating). It can't happen that I invest in a particular asset or a company today and then I start promoting it tomorrow. Third, do not do contra trading (multiple buy and sell trades on the same day or the next trading day, as per Westpac). Fourth, do not act on insider trading.

It's just that the guidelines specifically say finfluencers. But with or without finfluencers, I think dos and don'ts are mostly the same.

How difficult or easy is the process of being registered with SEBI?

December 2018 is the time when we got registered. It was seamless for us because it took anywhere between four to four-and-a-half months. All the documents that were required were clearly stated.

Ours was a RIA (Registered Investment Advisor) license in a corporate structure. What I've heard is that if one is going for an RIA license, the paperwork is even less.

If the license is not too tough to get, why not comply? The fees are not extremely hard in comparison to what the finfluencers earn and it takes three to four months to get registered. Why not take it and be on the safer side?

What is your take on Advertising Standards Council of India (ASCI) asking finfluencers to display their educational qualifications or credentials while endorsing products or services?

Say an engineer developed an interest in finance at a later stage and was not in a position to do an MBA or an MCom, although they should, if they are in this domain. But it's not possible for everyone. Plan B is to incorporate a company and hire a person who has the qualifications, and then take the license in the company's name.

Finfluencers began to gain attention in 2020. From then until now, how have the opportunities in terms of brand partnerships evolved?

We have never been a sponsorship-oriented business model. We rarely did brand promotions back then. And, we rarely do it today. The only visible trend I see is that no cryptocurrency apps approac (us).

Crypto apps were at their peak towards the end of 2020, and they were so desperate to get every finfluencer on board. I was not interested at all. After trying for months, they finally gave me an option wherein they asked me to come to a session with them.

They said I could take whatever money was required. They even gave me the option to criticise their brand. Today, I don't see a lot of such examples.

With the venture capital (VC) funding also drying up, we are not seeing 50 brands becoming unicorns like it used to happen in 2020 and 2021. It directly affects finfluencers because a lot of brands that come to influencers are actually D2C brands or start-ups wanting to scale immediately through them. If they don't have that kind of funding, I think all influencers get affected.

The full Budget 2024 will be read out after the new government is elected this year. What are your expectations then?

There's always a debate between being too populist versus being too pragmatic. Whichever government comes into power, the old tax regime should end and some of its perks should be merged into the new tax regime. Thus, there should be one regime.

Do you think that because of the actions of a few finfluencers which led to stringent actions being taken against them by SEBI, it has caused a negative impact on finfluencers who followed every rule to the T?

For people who are not trying to go viral overnight, things haven't changed much. People are more circumspect (unwilling to take risks), but I think that it's good. Because ultimately, not just in finance, but in health, law, and almost in all spheres, it's better if you are a little more circumspect. If SEBI initiates more action, it creates a barrier to entry and in the long run, it reduces competition.

Read More: Interim Budget 2024: Finfluencers expect women-centric boost, direct tax relief