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Commodities Transaction Tax Applicable on Non-Farm Products from 1 July 2013

Jun 21, 2013 11:14 IST

Central Board of Direct Taxes (CBDT) on 19 June 2013 announced that the Commodities Transaction Tax (CTT) shall be levied on the derivative contracts of non-agricultural commodities which are transacted via recognised commodity bourses. This rule shall apply with effect from 1 July 2013.
 
It is also important to note that 23 specified agricultural commodities are exempted from this tax. All the processed agricultural items such as guar gum, soya oil and sugar are subject to the CTT on future contracts. CTT will not be applicable to the agri-commodities but it will apply to energy complex as well as metals which are traded in the futures exchanges.

Levying CTT at the rate of 0.01 percent on the contract price will have an impact on the commodity bourses. This will happen because the higher cost of transaction would grip the margins of the traders.

In the meanwhile, the commodity markets have factored in CTT already, which means that the turnover would not be affected in a huge way. The agricultural commodities which are exempted from CTT include wheat, turmeric, soya bean, red chilli, mustard seed, potato, pepper, cotton, cotton seed, coriander, copra, channa, castor seed, cardamom, barley and almond.

It is worth noticing that CTT was proposed for the first time in the 2008-2009 Union Budget. It was not implemented because of widespread opposition.

Is this article important for exams ? Yes44 People Agreed
Read more Current Affairs on: Commodities Transaction Tax , CTT , Non-Farm Products

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