FinMin may cut commodities transaction tax

The tax, 0.01%, was imposed on commodity futures trading on national electronic futures exchanges

The Union finance ministry is considering relaxing the commodities transaction tax (CTT) imposed on non-agricultural commodities in July 2013.

The tax, 0.01 per cent, was imposed on commodity futures trading on national electronic futures exchanges.

While agri commodities were exempted, these commodities were defined such that the tax covered 95 per cent of the trading in the futures market. As the tax had resulted in a fall in volumes, all exchanges had opposed the tax.

Last week, at a meeting with Arvind Mayaram, secretary in the department of economic affairs, chiefs of commodity exchanges said the list of exempted commodities should be fine-tuned to include more commodities. Mayaram had ruled out doing away with the tax.

Sources said the ministry was considering including eight or nine commodities, including sugar and rubber, in the list of exempted ones. Currently, the exempted commodities include all farm products; it includes cottonseed oil cake and soymeal.

It is expected a decision on the matter will be announced in the interim Budget, to be presented in mid-February.