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The Centre must consider levying commodities transaction tax (CTT) to improve transparency in the trading of commodities, especially gold.
This was suggested by some of leaders of the domestic finance industry at a pre-Budget meeting with Finance Minister P. Chidambaram, at North Block on Monday.
Increased gold imports and local derivative trades on the yellow metal have worried policymakers recently, given that domestic savings are going into gold.
It was pointed out that more retail investor funds were moving to the commodities markets against finding their way to the equity markets.
The presence of securities transaction tax (STT) for equity trades was seen as a dampener for retail investors putting their money in equity markets.
Either the Government should impose CTT or do away with STT to level the playing field, a top executive of the financial sector is learnt to have suggested to the Finance Minister.
There was also a suggestion to provide tax incentives to investors who buy long-term equity-oriented mutual fund schemes.
A case was also made by finance industry leaders for policy re-orientation towards encouraging the “mass affluent” to park their funds in equities market rather than only focus on the small retail investor.
“Everything is centred on encouraging small retail. In fact, we should encourage mass affluent,” Pratip Chaudhuri, SBI Chairman, said after the pre-Budget meeting.
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