The Hindu Business Line : Commodity transaction tax likely from June

Mumbai, May 1 Having failed to convince the Union Finance Minister, Mr P. Chidambaram, on rolling back commodity transaction tax (CTT), the exchanges and broking firms are now gearing up for a smooth roll out of the tax. Mr Unupom Kausik, Chief Business Officer, NCDEX, said: “The Bill has to be signed by the President and notified by the Ministry. Going by the precedent, CTT should come into force from June 1.”

The exchange has to make minor changes in the software and it will be ready once the notification clarifies the rate of CTT to be charged, he added. The Finance Bill proposed a CTT of 0.017 per cent on the seller, besides providing a provision of 0.125 per cent tax on the buyer. Mr Navin Mathur, Head, Angel Commodities, said:

The turnover will be affected initially, but it will slowly be absorbed, as it was done in the case of securities transaction tax (STT), he added. Day traders and jobbers, who already work on wafer thin margins, will be the ones to be hit badly. “Arbitrageurs and jobbers account for a major portion in terms of volume. Retail and corporate participation will also take a beating initially,” Mr Mathur said.

Apart from commodity exchanges and trade bodies such as CII and Assocham, Prime Minister’s economic advisor, Mr C. Rangarajan, has advised the Finance Minister to review the tax, after the Union Agriculture Minister, Mr Sharad Pawar, and the Deputy Chairman of Planning Commission, Dr Montek Singh Ahluwalia, shared similar views.

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