Union Budget 2024 Expectations: 5 things that markets expect from Nirmala Sitharaman

10 Jan 2024 , 12:30 PM

Even though Finance Minister Nirmala Sitharaman stated that the interim Budget presented on February 1, 2024, would be a non-event, market expectations for it have not entirely turned stale.

‘I hate to be a bearer of bad news, but the Budget on 1st February is merely a vote on account. It serves as a budget to cover expenses until the next government assumes power. There won’t be any remarkable announcements; you’ll need to be patient until after the general election,’ stated Sitharaman in a recent conference.

Though a full-fledged budget is most likely to be presented in July, it is not impossible that a few important announcements will be made, particularly ahead of the general election. This might contain a few announcements for stock market investors.

While a comprehensive budget is expected in July, there’s a chance that some crowd-pleasing declarations, particularly, geared towards the upcoming general election, might be made before that. This could encompass certain announcements tailored for stock market investors.

STT Removal:

Analysts hope for a relief in the form of either the entire elimination of the securities transaction tax (STT) or a reduction for the cash market. They’ve had this demand for some years now.

STT was introduced in 2004 and is imposed on a variety of securities transactions. Increasing market involvement has also resulted in increased government tax revenue in the form of STT.

LTCG Relief:

Analysts anticipate modest respite for long-term capital gains (LTCG) tax. They think that such relief will encourage more investors to put money into stock markets. However, the government has yet to respond to this long-standing demand. Demand has regained traction as GST collections have increased.

Crypto markets hope:

Despite prolonged speculation, there has been minimal advancement in the regulation of cryptocurrencies. While the government has introduced the Central Bank Digital Currency (CBDC), industry participants are advocating for a more comprehensive policy.

Double taxation on dividends to be eased:

Currently, the government charges taxes on dividends distributed to shareholders. However, because the dividend is already paid after the corporation has paid taxes on its profits, this amounts to double taxation on dividends.

Some value investors, like Vijay Kedia, have expressed their dissatisfaction with the policy. Market participants feel that any alleviation from this oddity would be welcomed.

Policy announcements:

Analysts in the market anticipate potential policy updates or the extension of current policies. For instance, there is optimism for the continuation of the government’s primary incentive program for manufacturing electric vehicles (EVs) into the upcoming fiscal year. Any favorable developments are likely to contribute to the further ascent of stocks such as Tata Motors, TVS Motor, and M&M.

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