Commodity exchanges and traders heaved a sigh of relief at the scrapping of the Commodities Transaction Tax (CTT), even before it was implemented.
“The Finance Act, 2008 introduced the Commodity Transaction Tax to be levied on taxable commodities transactions entered in a recognised association. The Prime Minister’s Economic Advisory Council has recommended the abolition of the CTT. I, therefore, propose to abolish the Commodity Transaction Tax,” said Finance Minister Pranab Mukherjee in his budget speech.
“The removal of the CTT is an encouraging move for commodity exchanges as it would clear apprehensions regarding costs involved in using the exchange platform,” said R Ramaseshan, managing director and chief executive officer, National Commodity & Derivatives Exchange Ltd (NCDEX) Ltd.
CTT was proposes in last year's budget but was not introduced. The abolition of the CTT would stop any migration from commodities exchanges to over-the-counter (OTC) markets, or telephone markets, which is largely unregulated and unorganised.
“The abolition of the CTT comes as a breather to commodity markets reeling under frequent interventions, the recent one being the suspension of sugar futures till year-end,” said Anand James, senior analyst at Geojit COMtrade.