More commodities exempted from CTT

The list now includes rice, dals made from pulses such as tur and urad, onions and various spices

The Union finance ministry has expanded a list of commodities exempted from commodities transaction tax (CTT). Now, the list includes rice, dals made from pulses such as tur and urad, onions and various spices.

Experts say with this it will be possible to launch contracts for these commodities in the futures and forwards segments.

A February 10 notification from the ministry amended the CTT rules and brought out a new list of exempted items that included rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, ragi, betelnut, cinnamon, nutmeg, jowar, linseed, gram dal and sunflower seed.

As of now, these commodities aren’t traded in the futures segment, though some are traded in the forwards category. The National Commodity & Derivatives Exchange (NCDEX) has launched forward contracts for many of these commodities. However, trading in all forward contracts is subject to CTT.

“This development reflects the growing recognition and confidence in the government that markets are taking a very crucial role in the agricultural economy through our efforts such as developing smart mandis, digital e-procurement platforms for government bodies, warehousing finance at the farmer’s doorstep and efficient collateral management. We welcome this and look forward to bringing the market even closer to the farmer,” said Samir Shah, managing director and chief executive, NCDEX.

Next week, NMCE, an Ahmedabad-based commodities futures exchange, is set to launch forward trading in several commodities. An official said though all pulses weren’t traded in the futures segment, forward trading had been allowed. He added it was likely the government would allow futures trading in these commodities, too.