Finmin likely to withdraw CTT

The finance ministry is likely to withdraw the Commodity Transaction Tax (CTT), which was introduced more than year ago but was not imposed.

The CTT, which was introduced by the then Finance Minister P Chidambaram in his Budget for 2008-09, was not levied due to stiff resistance from commodity exchanges and sectoral regulator Forward Markets Commission (FMC). Sources in the Finance Ministry said, the department is considering the request of the FMC and may withdraw the tax proposal in the Budget to be announced on July 6.

Besides FMC, several industry chambers, including Ficci, have sought withdrawal of CTT, citing that its imposition was not desirable as it would encourage “dabba trading” (grey market operations).

FMC chairman B C Khatua said that he had already written to the finance ministry to abolish CTT in the forthcoming Budget.

“In the pre-Budget memorandum, we have proposed to remove CTT for the future growth of the commodity market,” he said.

The government had introduced CTT on the lines of Securities Transaction Tax (STT).

As per the proposal, a seller would pay 0.017 per cent CTT on option premium if he sells an option in goods or an option in commodity derivative. For the sale of any other commodity derivative, the seller would pay 0.017 per cent of the price at which the derivative is sold.

The purchaser would be charged 0.125 per cent on the settlement price of the option if he sells an option in goods or option in commodity derivative, where option is exercised.