CTT may be notified soon to curb prices

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With inflation showing no signs of cooling off despite the array of fiscal and monetary measures employed by the Centre, the government is set to operationalise the commodities transaction tax (CTT) ‘sooner, rather than later.’ This is a U-turn on its earlier stance to put off the notification of CTT to a later date.

The Prime Minister’s Economic Advisory Council, which had earlier recommended a review of the tax and a reduction in its rate as it would hurt commodities trading volumes and contribute to inflationary pressures, has had a rethink on the matter. It is now inclined to implement the tax, expecting it to put a dampener on commodities trading, which it fears is fuelling inflation.

“We feel that speculative trading is largely responsible for the higher prices of certain commodities. So, introducing the CTT would to some extent help in discouraging such activities,” a senior government official told FE .

The tax, introduced in this year’s Budget, has not been notified so far, since the finance ministry was waiting for inflation levels to come down (reported by FE earlier). The ministry initially expected to implement the tax by June.

CTT, on the lines of the securities transaction tax (STT), would be levied on commodities transactions, including the sale and purchase of options in goods and any other commodity derivatives. The tax rate would be between 0.017% and 0.125%.