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The Finance Ministry has expanded the list of agricultural commodities that are exempted from the commodities transaction tax (CTT). As many as 38 items have been added to the existing list of 23 agricultural commodities that are exempt from the levy.
For this purpose, the Central Board of Direct Taxes has amended the CTT Rules notified in July 2013. Currently, a 0.01 per cent CTT is levied on non-agricultural products, mainly metals.
The new items that have been added include rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, raagi , betelnuts, cinnamon, nutmeg, jowar, linseed, gram dal, jowar and sunflower seed.
Some of the commodities added to the list are not traded on the futures exchanges, though produce such as cotton and cottonseed contracts are traded.
Futures trading in commodities such as rice and pulses such as moong, tur and urad have been banned.
This move is significant as it comes a fortnight before the Union Budget for 2015-16 is to be presented.
The Forwards Market Commission – the regulator for commodity futures market in India – had recently suggested to the Finance Ministry that the CTT should be either done away with in the upcoming Budget or the quantum of the levy should be reduced.
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