Commodity Transaction Tax from 1st July 2013
FINANCE Act 2013, in Chapter VII introduced the Commodity Transaction Tax with effect from a date to be notified by the Government. Government has now notified 1st July 2013 as the date on which Chapter VII is to come into force.
Section 117 of the Finance Act 2013, states:
On and from the date of commencement of this Chapter, there shall be charged a commodities transaction tax in respect of every taxable commodities transaction, being sale of commodity derivative, at the rate of 0.01 per cent. on the value of such transaction and such tax shall be payable by the seller.
"Taxable commodities transaction" means a transaction of sale of commodity derivatives in respect of commodities, other than agricultural commodities, traded in recognised associations."
Why CTT? In his Budget Speech, the Finance Minister said,
"There is no distinction between derivative trading in the securities market and derivative trading in the commodities market, only the underlying asset is different. It is time to introduce Commodities Transaction Tax (CTT) in a limited way. Hence, I propose to levy CTT on non-agricultural commodities futures contracts at the same rate as on equity futures, that is at 0.01 percent of the price of the trade. Trading in commodity derivatives will not be considered as a ‘speculative transaction' and CTT shall be allowed as deduction if the income from such transaction forms part of business income."
CBDT Notification No. 45/2013/F.No. 142/09/2013 - TPL, Dated: June 19, 2013