FinMin to notify CTT on Thu; 23 agro-items excluded: Srcs

Moneycontrol Bureau

The finance ministry may notify implementation of commodity transaction tax on Thursday, which will be applicable to non-agri commodities futures from July 1, sources informed CNBC-TV18.

Finance minister P Chidambarm had proposed a transaction tax of 0.01 percent on non-agri futures traded on the bourses in the 2013-14 Union Budget. The Commodity Transaction Tax, which is similar to the Securities Transaction tax (STT) is not applicable to spot trading.

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Sources said that the finance ministry will also clarify CTT’s applicability on commodities. CTT will not be applicable to around 23 agriculture commodities including wheat, soyabean, maize, almond, barley, channa, cardamom, coriander, cotton and guar seed.

However agro-processed food like soyaoil, guar gum would attract CTT.

"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 had 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.

It must be noted that precious metals like gold and silver are most traded commodities on the Multi-Commodities Exchange. The government has been trying to curb gold demand in view of high current account deficit. Notification of CTT could be another step in this direction.