Even as the finance ministry has dismissed any prospect of a rollback of the commodities transaction tax (CTT) introduced in this years Budget, it is not averse to delaying its notification. The tax was discussed earlier this week at a high-level meeting between Prime Minister Manmohan Singh, finance minister P Chidambaram and agriculture minister Sharad Pawar.
If the tax had to be tinkered with in any way, it would have been done before the Finance Bill, 2008, was passed, an official source said. The finance ministry is of the view that there is not enough justification to either rework the tax structure or its rate as commodities exchanges have sufficient business to justify it.
Though the notification was initially to be issued by June, the Central Board of Direct Taxes (CBDT) is now expected to notify details of the tax at a much later date, the official said. The tax can only be levied after the notification comes into effect. It may be recalled that last year, the Budget announcement to levy fringe benefit tax on employees stock options was notified only in October 2007.
The CTT would be levied on all transactions on commodities exchanges, at rates ranging from 0.017% to 0.125%. Commodities exchanges have been up in arms against the tax as it would increase transaction costs. The PMs Economic Advisory Council recommended reducing the tax rate as it would hurt commodities trading and contribute to inflationary pressures.