The government has introduced the Commodities Transaction Tax (CTT) at 0.1 per cent on non-agriculture futures contracts in a bid to widen its tax base, while the Securities Transaction Tax (STT) has been reduced to 0.01 per cent.
With respect to CTT, the discrimination is glaring between agricultural and non-agricultural commodities; which is not the case in STT.
“This treatment is like having STT on shares of ‘Company A’ and no STT on ‘Company B’,” said Shreekant Javalgekar, Managing Director and CEO, MCX, the leading commodity exchange of the country.
Further, he said the currency markets were 500 per cent bigger than the commodities markets, yet there was no transaction tax levied on them, which was again discriminatory. Gold ETFs too had been charged at 0.001 per cent as against 0.01 per cent for gold futures traded on the commodity futures markets.
Gold ETFs is 100 per cent backed by physical gold.
CTT on Indian commodity exchanges will increase the transaction cost by more than 300 per cent on an average, “which will drive the trade towards ‘dabba’ trading or international markets.” The commodity futures markets have created nearly 10 lakh jobs in non-urban areas, which are also under threat now. This is also expected to be inflationary as spot market and futures market move in tandem.
