The Multi Commodity Exchange (MCX) held its board meeting on Friday to gauge the impact of the commodity transaction tax (CTT) on its business prospects. The Board has decided to make a detailed presentation to the market regulator, the Forward Markets Commission (FMC), on the impact of this levy.
The Government levied a CTT of 0.01 per cent on non-agriculture commodity derivatives in the Budget presented last month. MCX fears that this tax will lead to several job loss in non-urban areas, distortion in the price discovery mechanism, increase in hedging cost and drop in trading volumes.
In a communication to the FMC, the exchange will highlight the unprecedented tax discrimination between derivatives in agricultural and non-agricultural commodities, shift of volumes to illegal (dabba) trading platforms and to the international markets, said MCX in statement.
The different treatment given while imposing CTT among derivatives with different underlying assets in commodity trading is inconsistent with the taxation policy of the country, it said.
The Board has also decided to take all the requisite steps to prevail on different authorities to withdraw CTT on non-agri commodities.
Shares of MCX were down one per cent at Rs 885 on Friday. In the last one month, shares of the company have fallen 26 per cent.