Since this is an election year, the budget is expected to provide continuity to the government’s previous initiatives without initiating any drastic reforms/additions. With the forthcoming budget, the financial sector is seeking a more comprehensive policy on cryptocurrency regulation, and the government is expected to create a regulatory framework that increases the ICRA’s participation in the crypto market. The industry expects the government to rationalize the tax rates levied on Indian and foreign banks. RBI, SEBI, and IRDAI Regulators have started working together to ensure that financial innovation does not come at the cost of financial stability. The 2024 Union Budget is expected to make accommodations toward regulating the crypto and fintech sectors by setting up a separate inter-regulatory cooperation framework. The government has also been nudging banks to settle their foreign transactions via Indian rupees since July last year. Launching international trade in the Indian currency could lead to savings of $30-36 billion annually, reducing the pressure on the exchange rate. A push toward the same in this year’s budget can be anticipated with increased incentives for banks. The dividends tax is another area where markets will be hoping for a change. Currently, a firm pays taxes on its profits, but at the same time, the shareholders are also taxed on their dividends, resulting in double taxation. Changes to rectify this anomaly can be awaited, with reforms to make dividends tax-free for shareholders.
