Tuesday, June 17, 2014

Commodity Transaction Tax to be diluted in Budget

Commodity Transaction Tax to be diluted in BudgetThe Commodities Transaction Tax is likely to be revamped in the coming budget.
Under the new system, compulsory delivery-based contract may be exempted from the tax, which means only speculative trade will attract the levy.
This tax was imposed on July 1, 2013 on the line of securities transaction tax.
It is levied at the rate of 0.01 per cent on all non-agricultural products such as gold and silver and even on processed agricultural processed products such as sugar. At this rate, tax for trade worth ₹1 lakh would be ₹10.
Volume dips

Data from the Forward Market Commission reveal that cumulative value of trade during April-May this fiscal dropped to ₹9.53 lakh crore from ₹28.16 lakh crore in the same period a year ago, a dip of 66 per cent.
“Volume has come down which is affecting fair price discovery,” SC Agarwal of SMC Securities, a Delhi-based equity and commodity trading firm, said. Traders also alleged that this tax made exchanges 350 per cent more expensive.
At the same time, non-agricultural commodity consist of over 80 per cent in total trading, which is why trade has been affected.
Though, participants want the tax to be removed completely, there are no such indications as of now.
Many market players raised the demand for doing away with the transaction tax completely before the Finance and Economic Affairs Secretary Arvind Mayaram during a conference organised by Commodity Participants Associations of India on Saturday.
Regulator’s wish list

Meanwhile, the FMC has pressed for lowering the transaction cost.
This was conveyed during Finance Minister Arun Jaitley’s meeting with all the regulators of financial sector in Mumbai few days ago.

No comments:

Post a Comment