MUMBAI (Commodity Online): Opposition against the proposed Commodity Transaction Tax (CTT) is growing with both Federation of Indian Chambers of Commerce & Industry (FICCI) and the Associated Chambers of Commerce & Industry of India (ASSOCHAM) voicing their concerns.
FICCI argues that since the underlying asset of commodity derivatives is a global asset, imposing CTT would raise the cost of transaction in Indian exchanges, thereby triggering a volume shift from Indian exchanges to overseas exchanges. There should be parity between Indian and global exchanges, FICCI said while also pointing out that the tax will also discourage the participation of farmers in the commodity markets.
ASSOCHAM stated that there should not be any CTT or even tax on equity derivatives. They should be treated the same way as interest rate and currency derivatives- as a hedging instrument.
India's ballooning fiscal deficit is forcing the government to secure additional source of revenue and with commodity trading seeing explosive growth over the past years, the huge volumes are expected to boost government cash inflows.
