Budget 2013 proposes commodity transaction tax on non-agri futures trade to hit commodity exchanges
The commodity transaction tax (CTT), which is in similar lines of Securities Transaction tax (STT), would work out to Rs 10 for transaction worth Rs one lakh.
"There is no distinction between derivative trading in the securities markets and derivative trading in commodities markets. Only the underlying asset is different. It is the time to introduce commodity transaction tax in a limited way," Chidambaram said while presenting Budget for the 2013-14 fiscal in the Lok Sabha.
"Hence, I propose to levy CTT on non-agricultural commodities futures contracts at the same rate as in equity futures, that is at 0.01 per cent from the price of the trade," he said.
However, Chidambaram said trading in commodity derivatives would not be considered as speculative transaction and hence CTT would be allowed as deduction if the income from such transaction forms part of the business income.
Reacting to the development, the country's largest commodity bourse MCX Managing Director and Chief Executive Officer Shreekant Javalgekar said, "CTT on selected items is not good. It will increase the hedging cost by 310 per cent. It will reduce our global competitiveness."
He said the government has "targeted small segments and not currency futures." Much of non-agricultural items such as gold and silver are traded on the MCX.
It may be recalled that Chidambaram had announced CTT of 0.017 per cent while presenting the
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