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Saturday, November 27, 2021

Union Budget 202: From CTT to Law on Hedging, These 3 Reforms Will Boost the Commodity Market

Union Budget 2021 India: The budget has expectations of some reforms to the commodity market, which will increase investor participation.

Indian Union Budget 2021-22: As the stock market, there are some uncertainties in the commodity market as well. Several factors such as trade wise, weak currency, geopolitical tension can affect the commodity market. Apart from this, there are some factors like tax and hedging, which affect the market. In such a situation, the commodity expert has some expectations from the Finance Minister in the budget this time. They say that the removal of CTT tax, reduction of import duty on premium metal and a new law on hedging may give a boost to the commodity market. This will increase the participation of investors in the market.

CTT revisited

The demand for fresh review on commodity transaction tax is the first number in this list. Experts say that the decision to remove CTT in the budget can increase the participation of investors in the commodity market. This step will give a boost to the commodity market. Ajay Kedia, director of Kedia Advisory, says that CTT affects liquidity and volume in the commodity market in many ways, with the removal of it will increase volumes.

Law on hedging

Demands to enact a new law on hedging in commodities are also exed parting; He says that this will benefit both the company and the investors.

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What is Commodity Transaction Tax (CTT)

The objective of the Commodity Transaction Tax (CTT) is to keep an account of the futures market movements. At the same time, when it was brought, the impact of CTT on the commodity futures market was seen on MCX and NCDEx and there was a huge fall in the volume of trading on the first day. MCX is traded in futures for non-agricultural products, which include gold, silver and other metals. Similarly, futures trading of agricultural products is mainly done on NCdex.

Demand to reduce import duty

The Gems and Jewellery Export Promotion Council has demanded the government to reduce the import duty on gold to 4 per cent on the budget 2021. The industry has also demanded exemption from Tax Collected at Source (TCS) and reduced import duty on polished precious and semi-precious gemstones. Currently, the import duty is 12.5 percent.

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Expert says that by doing this, the participation of investors will also increase in trading. At the same time, the organized business will get a boost in this area. This will also help prevent smuggling. The GJEPC demands that the import duty on cut and polished precious and semi-precious gemstones be reduced from 7.5 per cent to 2.5 per cent.

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