Budget 2024 Expectations: From CTT to GST issue, here are long-pending demands

Budget 2024 Expectations: The commodity markets have emerged as a robust exchange to manage the risk associated with the trading of commodities in India. However, the growth has slowed down since the Commodity Transaction Tax (CTT) was introduced in 2013. There is still a tremendous amount of unfinished agenda for the commodity markets. The interim budget 2024 could be a good beginning to address these long-pending issues.

Union Finance Minister Nirmala Sitharaman will present the interim Budget on February 1. The full-fledged budget for the financial year 2024-25 will be announced once the new government comes to power after the upcoming 2024 Lok Sabha elections.

The commodity market experts have outlined six pre-budget expectations including the reduction or abolishment of CTT, GST issues, adequate infrastructure for farmers, allowing commercial banks to trade commodities, and opening of the commodities market to NRIs.

Also Read: Live updates on budget 2024 expectations

Besides these demands, Rishi Nathany, Chief Business Officer of the Multi Commodity Exchange of India Limited (MCX) said corporates in India need to hedge domestically which will give a huge fillip to the Indian commodity derivative markets to increase their liquidity.

“It will keep precious forex in India and will inculcate the culture of hedging in India which will be good for our overall economy because unless we are price-makers, not takers, India cannot dominate the world market,” he said.

Take a look at the top six budget expectations of the commodity market in detail,

1) Opening of commodities market to NRIs

Indian commodity derivative markets need to become more broad-based, vibrant, deep, and thereby more efficient, hence, the participation of such segments that can add more depth to the markets is a fundamental requirement, said Narinder Wadhwa, National President of Commodity Participants Association of India (CPAI).

“Indian Diaspora is an important segment and has an emotional attachment to the agriculture market in India. However, they have thus far not been allowed to take exposure in the agriculture market.”

Also Read: FM Sitharaman may enhance allocation for farm sector schemes

2) Abolishment/reduction of Commodity Transaction Tax

“The major part of transaction cost is CTT. In India, we have the highest transaction cost, hence, we have been chasing the government to reduce CTT because the commodity market is cost-elastic. If you increase the cost, there will be hardly any demand. For CTT rationalization, we have given out submission to the government,” Dr. Ashok Dalwai, Chairman of Doubling Farmers Income Committee and Commodity Derivatives Advisory Committee (CDAC) told LiveMint.

Wadhwa believes that abolishing CTT on agri-processed and non-agri commodities will encourage the participation of hedgers who have felt the pinch of increased impact cost and increased cost of transaction which is primarily due to Commodity Transaction Tax.

“If it cannot be abolished for any revenue consideration, then CTT paid should be allowed to be treated as tax paid u/s 88E and not as an expense. The Hedging interest shifted to overseas Exchanges due to the high cost of transactions,” the CPAI national president said.