Amid reports that the Finance Ministry plans to impose a tax on commodity derivatives in the forthcoming Budget, the Consumer Affairs Ministry today opposed any such move saying it would distort the nascent market.
“We are not in favour of imposing commodity transaction tax (CTT),” the Consumer Affairs Secretary, Mr Rajiv Aggarwal, told reporters on the sidelines of an event organised by industry body Assocham.
He said that a CTT on commodities derivatives on the lines of Security Transaction Tax (STT) will affect the growth of the organised commodity market. He added that the commodity derivatives markets are set up for price discovery and cannot be compared with stock markets.
According to media reports, the Finance Ministry was mulling over reopening the old proposal made by then Finance Minister, Mr P. Chidambaram, in the 2008-09 Budget to levy a 0.017 per cent tax on commodity derivatives trade (Rs 17 on Rs 1 lakh worth transaction).
Last month, the Consumer Affairs Minister, Mr K.V. Thomas, had written a letter to the Finance Minister, Mr Pranab Mukherjee, that it “would defer if there is an intent of introduction of CTT on commodities derivatives in the ensuing Finance Bill 2012.”
The Ministry of Consumer Affairs regulates the commodities market through the Forward Markets Commission.
Currently, there are 21 commodity bourses.