Govt mulls allowing commodity exchange warehouses to issue integrated GST for efficient hedging

The government is actively considering a proposal to allow commodity exchange accredited warehouses to issue integrated GST to allow corporate hedgers and traders to take delivery on the exchange platform to benefit fromset-off.

Currently, these warehouses issue bills with a component of state GST and traders with manufacturing centres in different states find it difficult to set it off.

The entire process pushes up the cost of hedging and discourages corporates from looking for alternate means to hedge their risk.

Narinder Wadhwa,National President of the Commodity Participants Association of India said repeated representations have been made to the government over the GST issue, and they have acknowledged it as a genuine concern.

Still, there has been a procedural delay in finding a solution. “We are hopeful that the government will address this concern to boost hedging on domestic exchange platform,” he said.

The GST set-off has gained prominence as the market regulator SEBI has made delivery mandatory on the expiry of all commodity derivative contracts, except for the energy basket contracts, which are cash settled.