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Traders want CTT abolished in processed agro commodities

The industry body has also urged the government to exempt CTT on delivery based non-agri commodity derivatives contracts

Dilip Kumar Jha  |  Mumbai 

pulses, dal, moong, tur

The (CII) has urged the government to abolish the (CTT) in processed agri commodities.

In a pre-Budget recommendation submitted to the government, argued the levy of on agri processed commodities has created an anomaly because of tax exemptions granted to primary agri commodities.

“The levy has drastically reduced hedgers’ participation in processed agri commodities on account of increased impact cost. The domestic hedgers have moved to hedging on international exchanges in commodities such as soya oil and sugar,” said the recommendation letter addressed to the Finance Minister Arun Jaitley.

The government exempted primary agri commodities such as oilseeds, guar seed and levied 0.1 per cent of on processed agri commodities such as refined soya oil and sugar effective July 1, 2013. Since then, volume of trade on commodity futures exchanges has decline drastically.

Traders’ body the Commodity Participants Association of India (CPAI), however, has in its separate recommendations requested the government to consider component as advanced tax paid to the government.

“All duties and taxes paid for commodity futures trade were considered as advanced tax paid to the government until 2009. But then Finance Minister P Chidambaram removed the clause in 2009. Since then, paid to the government is considered as simple tax paid. Entire commodity trade would see a substantial boost in sentiment, if is considered as advanced tax,” said Sanjay Rawal, President, CPAI.

The justified its demand for full exemption of on processed agri commodities as the levy directly impacted and common people. An efficient hedging platform with minimum impact cost would help in establishing a more stable price regime in these commodities,” said in its presentation.

The industry body has also urged the government to exempt on delivery based derivatives contracts. The body has recommended to facilitate trading on Saturdays and also extend trading time in agri commodities till 8 pm every day to enable to use futures platform after completion of the day’s work.

“We feel that if these suggestions can be considered and implemented, they would go a long way in helping our commodities grow and become more vibrant and allow them to further benefit the entire commodities value chain and its participants, starting from the farmer as well as the economy of our country,” said.

Among other suggestions, the has highlighted a relaxation in daily price limit, relaxations in intra-day open interest violation penalties, raising hedger’s limit and widening position limit in near month contracts. has also urged the government to allow banks’ participation in commodity futures trading, and permit cross product margin benefits within the same commodity complex. Reduction in staggered delivery period to 3-4 days from the 10 days was another demand.

First Published: Mon, January 01 2018. 02:27 IST