'Exempt commodity derivatives from transaction tax'
Any increase in transaction tax will lead to shifting of volumes to either overseas exchanges or to the domestic illegal market called 'dabba' trading market, it said.
Seeking commodities to be exempted from any transaction tax, industry chamber CII argued that a tax on commodity trade will dissuade those who desire to hedge their risks. "This in turn, would reduce market liquidity through reducing volumes and increasing bi-ask spreads."
"Some of the studies have shown that imposition of CTT may not lead to a significant increase in revenue for the government," CII added.
The CTT of 0.017 per cent on commodity derivatives was announced in the 2008-09 Budget, but was not operationalised.
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