The Hindu Business Line : Exchanges, broking firms to plead against commodity transaction tax

Mumbai, March 3 Commodity broking firms plan to ask market regulator Forward Markets Commission to take up the issue of Commodity Transaction Tax with the Union Finance Ministry. Commodity exchanges have also made a representation against CTT with FMC.

Mr P.H. Ravi Kumar, Managing Director, NCDEX, said: “We have approached the FMC against CTT. Commodity trade itself is in a nascent stage and measures like this will have an adverse impact.”

Mr Anjani Sinha, Director, MCX, said, “We have moved FMC, which will now take up the issue with the Ministry of Finance. The market is yet to mature as investment from banks, mutual funds and institutions are still not allowed. New products like options, trading on indices are also expected.”

If the Government wants to implement CTT in line with securities transaction tax it should have given the benefits offered in stock markets to commodity trading before implementing CTT, he added.

Revenue treatment

Revenue from the stock exchanges is treated as business income and losses are allowed to be set off against other business profit. On the hand, revenues from commodity trading are treated as speculative income.

The Union Budget has proposed a tax of 0.017 per cent on the seller of a contract and 0.125 on the buyer. Besides, a service tax of 12 per cent on the exchange levy and an education cess on the tax are also planned.

FMC will explain the apprehensions of the exchanges and brokers to the Government. “We will take up the matter with the Government and try to resolve the issue before April 1. We want an expert committee comprising members from the bourse, regulator and other participants, to decide whether the levy is necessary or not,” Mr B.C. Khatua, Chairman, FMC, said.

Mr Shylendra Kumar, Head-Commodities, Sharekhan Commodities, said: “The trade has struggled hard to come out of the bucket shop; if CTT is imposed it will force the commodity trading back to the bucket shop.”

Agrees Mr Dilip Bhatia, Director, Kotak Commodities: “We are planning to make a representation with FMC soon and I hope the Government will have a rethink on its decision.”

More Stories on : Budget | Taxation | Commodity Exchanges

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