Budget 2023 Indian Govt proposes Simplified KYC Process

The Indian government in the 2023-24 Union Budget proposed to simplify the Know Your Customer (KYC) procedure by taking a risk-based approach rather than the current one-size-fits-all approach.

The finance minister also announced plans to introduce a one-stop solution for updating identity and address through DigiLocker. Additionally, the number of Basic Custom Duty (BCD) rates on goods excluding textiles and agriculture is proposed to be reduced.

One stop solution for reconciliation and updating of identity

In the 2023-24 Union Budget Speech, the finance minister, Nirmala Sitharaman, proposed to introduce a one-stop solution for updating identity and address through DigiLocker. PAN will also serve as a common identifier for businesses for government digital systems.

The KYC process will be simplified with a risk-based approach

The finance sector regulators will be encouraged to have a KYC system that aligns with the goals of Digital India. A one-stop solution will be established using DigiLocker and Aadhaar to reconcile and update identity and address information maintained by various government agencies, regulators, and entities.

Unified Filing Process

The finance minister Nirmala Sitharaman announced that PAN will be the common identifier for specified government agencies’ digital systems for businesses required to have a PAN. This will ease doing business and will be facilitated through a legal mandate.

To eliminate the need for separate submissions of the same information to different government agencies, the minister proposed to establish a ‘Unified Filing Process’. This process will allow for filing of information or returns in simplified forms on a common portal and will be shared with other agencies based on the filer’s choice.

Fintech Services: The finance minister, Nirmala Sitharaman, stated that fintech services in India have been facilitated by the country’s digital public infrastructure, including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack, and UPI. She proposed to enable more fintech innovation by expanding the scope of documents available in DigiLocker for individuals.

Entity DigiLocker: The finance minister proposed the creation of an Entity DigiLocker for use by MSMEs, large businesses, and charitable trusts. This will allow for secure online storage and sharing of documents with various authorities, regulators, banks, and other businesses as needed.

In her Union Budget Speech 2023-24, finance minister Nirmala Sitharaman, said,

KYC process to be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach. One stop solution for reconciliation and updating of identity and address of individuals to be established using DigiLocker service and Aadhaar