The Commodities Transaction Tax on non-agricultural commodities futures contracts is likely to be effective from July 1.
The legal decks have been cleared for the Government to impose this levy at 0.01 per cent of the price from this date, sources close to the developments said. The current securities transaction tax rate on equity futures is also pegged at 0.01 per cent.
The process of notification of CTT is in the final lap and the legislative department concerned has given its nod for this levy. Futures contracts on all agricultural produce except processed agricultural items will be exempt from CTT, it is learnt. The CTT levy is going to be applicable on the sell side of the transaction and payable by the seller.
In his Budget speech, Finance Minister P. Chidambaram had said it was time to introduce CTT in a limited way.
He pointed out that there was no distinction between derivative trading in the securities market and derivatives trading in the commodities market – only the underlying asset is different. Chidambaram had also then said that trading in commodity derivatives will not be considered as “speculative transaction” for income-tax purposes.
He had said that the CTT will be allowed as a deduction if the income from such transaction formed part of the business income.