Chidambaram levies 0.01 percent CTT on non-agro commodities
New Delhi, Feb 28 : Introducing the Commodities Transaction Tax (CTT) in a limited way, union Finance Minister P. Chidambaram Thursday proposed to levy it on non-agriculture commodity trades at 0.01 percent of the price of the trade.
The CTT levied on the futures contracts of non-agro commodities such as gold, silver and crude oil will be at the same rate of the securities transaction tax (STT) levied on the purchase and sale of equities in the stock markets.
"There is no distinction between derivative trading in the securities market and derivative trading in the commodities market, only the underlying asset is different. Hence, I propose to levy CTT on non-agricultural commodities futures contracts at the same rate as on equity futures, that is at 0.01 percent of the price of the trade," Chidambaram said during his budget speech for 2013-14.
"Trading in commodity derivatives will not be considered as a 'speculative transaction' and CTT shall be allowed as deduction if the income from such transaction forms part of business income. As I said, agricultural commodities will be exempt," he added.
MCX Stock Exchange, India's new stock exchange, however, gave a thumbs down to the minister's proposal of introducing CTT on non-agro commodities.
"Any tax which could impact trade is not desirable," the exchange's vice president Arindam Saha told IANS.
Asked what kind impact of it is expected on trading on the commodity burses, he said: "Any comment now on that would be futuristic. Lets see how the market reacts in the next two days."