Imposition of Commodity Transaction Tax (CTT) on commodity futures trading will defeat the very purpose of having a platform to ensure transparent trade in the commodities business and will increase the cost at the real transaction value of the concerned commodities, KC Bhartiya, president of the Pulses Importers Association said.
PIA is the registered body representing Indian fraternity of pulses importers in the country.
In the recent Union Budget, finance minister P Chidambaram has proposed to introduce CTT on the commodity futures trading on the lines of STT on futures and options. Immediately, it spread gloom and disappointment across the commodity derivatives market.
“Our submission is that the introduction and implementation of CTT has direct adversities upon the very fundamentals of creating an electronic platform for bringing transparency and awareness within all sections of the agricultural trade ensuring fair market price to the farmers too,” Bhartiya said.
The total current cost of transaction in the commodity derivatives markets is round Rs. 3 per lac which will be increased to Rs 19.25 per lac, after imposition of CTT. Commodities are subject to so many taxes, such as mandi fee, sales tax/VAT, Central Sales Tax, Excise, Customs and Octroi, sources said.
The CTT cost will act as a deterrent to the large volume players as they might switch back to the oral regime, as a result of which the display on the exchanges may not show the correct and fair value of the product, he said.
This representation is not meant from the point of benefiting out of the cost of CTT but essentially from the perspective of the farmer having access and availability for the cause, he added.