New Delhi: There is a possibility that the government may impose transaction tax on commodity trading in the upcoming budget. Fearing the imposition of the new tax, India Inc has already started lobbying against the approval of the tax. Some of the organizations have even written to the Finance Minister, asking him not to implement Commodity Transaction Tax (CTT).

In an effort to make some extra earning for the treasury, the government may come up with CTT in the coming budget. However tax on share transactions (Security Transaction Tax-STT) has already been implemented. The industry believes that taxation on commodity will have adverse impact on nascent commodity trading industry and therefore the government must defer the implementation of the tax. At present, Indian commodity exchange does an average daily trade of Rs 54,000 crore. 

To prevent the government from taking such step, industry bodies the ASSOCHAM and the FICCI has also written to the Finance Minister. Secretary General of FICCI Dr Rajiv Kumar in his letter dated 27th January said, “Implementation of CTT will have direct impact on commodity futures trade in domestic exchanges and domestic futures trade may shift to international exchanges.”

However, the government has stressed on the increase in the futures trading in commodity market and appealed for decreasing membership fee to enable greater participation of the farmers. The ASSOCHAM secretary general DS Rawat said, “The implementation of CTT will inflate the operating cost of commodity exchange from Rs 3 per lakh to Rs 21.25 per lakh.”

Apart from FICCI and ASSOCHAM, Indian Bullion Market Association has also protested implementation of CTT. They said that commodity trades already come under the ambit of different types of taxes. It will increase cost and have its repercussion on economy in long term.

However, this is not a first attempt to implement CTT. Earlier implementation of CTT on commodity futures trade was announced in the 2009 budget.