India’s booming futures trade in commodities is likely to be tested soon, when the Government puts the proposed Commodities Transaction Tax (CTT) into effect.
CTT will be levied on gold, silver and other non-agricultural commodities traded through commodities exchanges, once the Finance Ministry formally notifies the tax.The detailed notification is under preparation. While Ministry sources indicated that the new tax could be levied from June 1, the trade is expecting the tax to be imposed from July 1.
TAX RATE
Under the new arrangement, sellers will have to pay 0.01 per cent tax, that is, Rs 10 for a transaction value of Rs 1 lakh. The current transaction cost (without any tax) is less than a third of this.
Analysts say imposition of the tax could affect trading volumes.
Finance Minister P. Chidambaram proposed this tax for non-agro commodities in the 2013-14 Budget. This proposal was part of the Finance Bill, 2013.The President had given his assent to the Bill after it was approved by Parliament. Now, the notification will pave the way for the implementation of the tax.
The Multi-Commodity Exchange (MCX), which has the biggest share of non-agro commodities trade, declined to comment on the development.However, soon after the presentation of the Budget on February 28, MCX Managing Director and CEO Shreekant Javalgekar had, in a statement, said Indian commodity exchanges will become 350 per cent more expensive due to the CTT and that a bulk of the trade will shift to unofficial channels or move outside India.