CTT on commodity indices and options in goods proposed

A commodity transaction tax (CTT) will be imposed on trading on commodity indices as well as options in goods with effect from April 1, 2020, according to Budget documents.

Recently, the NCDEX and the MCX launched commodity indices but trading has not yet been allowed by markets regulator Sebi. On January 16, Sebi had allowed stock exchanges to launch options in goods in the commodity derivative segment.

In the Budget 2020-21 documents, the government said it proposes to amend the Finance Act 2013 to charge CTT on the new commodity derivative products.

According to the proposed amendments, CTT will be imposed on trading in commodity indices. It is chargeable at 0.01 per cent payable by the seller, which is the same rate at which CTT is currently charged on sale of futures.

The commodity transaction tax will also be imposed on options on goods. It is chargeable at 0.0001 per cent payable by purchaser where option is exercised resulting in actual delivery of goods, which is the same rate at which CTT is currently charged on options on futures.

CTT on new commodity derivative products are proposed at a time when the industry has been demanding scrapping of it on agriculture commodities.