The imposition of commodities transactions tax (CTT) is a glaring discrimination between agri and non-agri commodities, which is not the case for securities transaction tax (STT) on shares transactions. This is like taxing shares of 'Company A' and not on 'Company B'.
Further, currency markets are 500 per cent bigger than the commodities markets, yet there is no transaction tax levied on them, which is again discriminatory. Gold ETFs too have been charged at 0.001 per cent as against 0.01 per cent for gold futures traded on commodity futures markets, even though Gold ETFs are 100-per cent backed by physical gold.
CTT on Indian commodity exchanges will increase the transaction cost by more than 300 per cent on an average, which will drive the trades towards dabba trading or international markets. The commodity futures markets have created nearly 10 lakh jobs in non-urban areas, which are also under threat now. This is also expected to be inflationary as spot market and futures market move in tandem.
The Prime Ministers Economic Advisory Council had advised against the imposition of CTT and the provision of CTT was abolished in Lok Sabha in 2009-10. No fundamentals have changed since then, and still CTT has been levied on non-agri commodities. The commodities futures industry fails to understand this rationale.