Almost a year after announcing the Commodity transaction tax (CTT), to be levied on options and futures of commodities, the government is yet to notify it, though it is going to present the interim budgeton Monday.
The government had introduced the CTT of 0.017 per cent on the lines of the securities transaction tax (STT) in the budget of 2008-09. While presenting the budget for 2008-09, Chidambaram had said, "Transaction in commodity futures has come of age. Hence, I propose to introduce CTT on the same lines as STT on options and futures." It was also part of the Finance Bill passed by Parliament.
Soon after the announcement, the tax drew the ire of traders, who said the tax will kill the futures market and will bring down investor participation.
According to experts, the CTT does not exist anywhere in the world except Taiwan, and even there commodity futures trading is conducted through the stock exchange, where they contribute only 0.03 per cent in the turnover of the exchange. They also pointed out that in India, taxes on commodities are the highest. In fact, after income tax, bulk of revenue comes from taxes on commodities.