Leading commodity bourse MCX today urged the government to scrap commodity transaction tax (CTT) and allow foreign stock bourse/financial bodies to hold up to 15 per cent stake in the recognised commodity bourse.
CTT, which is in place since July 1, 2013, is a tax levied on exchange-traded commodity derivatives in India on the lines of the Securities Transaction Tax.
"Non-agricultural commodities should not be subjected to CTT as is the case with agricultural commodities, as these contracts help SMEs to hedge in rupee denominated contracts in an effective manner on domestic exchanges," MCX said sharing its budget wishlist for the 2016-17 fiscal.
CTT increased the cost of trading of exchange traded derivatives trading by almost 300 per cent. There has been more than 50 per cent reduction in trading volumes after introduction of CTT, it said in a statement.
The rising trading costs has also encouraged migration of financial businesses to offshore centers like Dubai and Singapore, lured by low cost and zero taxes, it added.
That apart, MCX has sought the government to allow cenvat credit for the first removal of excisable goods from exchange-designated warehouse after initial deposition in the same warehouse to encourage delivery-based transactions on commodity exchanges. The above facility may be carried under the proposed GST regime also.
MCX also demanded the government allow a foreign stock exchange/depository/banking company/insurance company/public financial institution to hold up to 15 per cent of the paid up equity capital of recognised stock exchanges, the statement added.
