The commodities transaction tax (CTT) is likely to come into force within the next two months as the details, including the collection, payment and the procedures for filing returns, will take some more time to be firmed up.
The CTT, which will be administered by the Central Board of Direct Taxes (CBDT), will be levied at the rate of 0.017 per cent on sellers of commodity futures as well as options. Purchasers of options, who exercise them, will pay 0.125 per cent on the basis of per transaction value.
Commodities exchanges and traders lobbied hard for the tax, the only new one introduced in Budget 2008-09, to be withdrawn or relaxed at the very least.
Last week, after the Finance Bill 2008 was approved by Parliament, it became clear that the finance ministry is in no mood to oblige.
The Bill is expected to receive the President's assent in a few days from now, making all its provisions law.
However, a notification spelling out the implementation of the CTT will only be issued in a month or two after the guidelines are finalised, a Finance Ministry official said. It may be recalled that the Securities Transaction Tax (STT), on which the CTT is modelled, had also taken three months time to come into force after being announced in 2004.
Staffers at India's 24 commodity exchanges, who will collect the tax from traders, will also be sensitized about various aspects of the tax. The monthly collections will be deposited with the central exchequer by the first week of the subsequent month. The total turnover in these exchanges stood at over Rs 40 lakh crore in 2007-08. The Income Tax department expects that the tax would fetch around Rs 5,000 crore revenue in the first year of its impelmentation.
Data captured through the CTT is likely to be mined by the department to sniff out potential tax evasion.