What is Commodity Transaction Tax (CTT)?
The CTT Tax or Commodities Transaction Tax is levied on Trades made on Commodities Exchanges similar to Securities Transaction Tax – STT on Equity Trades. It is a tax payable to the Central government by commodity traders and hence categorised as a regulatory charge.
When was the (CTT)Commodity Transaction Tax introduced?
CTT was first proposed in 2008, the proposal met with vigorous opposition from Commodity Exchanges. They disputed that Commodity trading in India was at an emerging stage & introduction of CTT could unfavourably affect them. Hence the plan was withdrawn.
CTT was proposed again the Budget in 2013, but only on Non-Agricultural Commodities such as Gold, Silver, Aluminium, Crude Oil among others. This time the Bill was passed & CTT was levied on Trades in Commodity Futures on & after 1 July 2013.
How is CTT or Commodity Transaction Tax calculated?
CTT is also charged at Rs.10 per Lakh of & only on the Sell Side Turnover.
Example: If the Buy Turnover is Rs. 1 Lakh and Sale turnover is Rs. 2 Lakhs, CTT applicable will be Rs. 20 i.e. 0.1% on Rs. 2,00,000 (i.e. Rs. 20)
You can calculate the CTT liability for commodity transactions on the Commodity Brokerage Calculator https://www.enrichbroking.in/BrokerageCalculator.html
It is important to remember that, CTT is applicable only on non-agricultural commodities. No CTT is applicable on commodity trading of agri commodities.
What is the Impact of CTT on trading volumes?
After introducing CTT in commodity trading, trading volumes on the MCX and other commodity exchanges in India have seen a fall as high as 50% – 60%.
It has also driven away smaller segments of the volume contributors away from the segments since scalping, jobbing, etc have become almost become impossible and expensive proposition.
You can view the detailed charge list to or calculate all the costs such as Exchange Charges, CTT & SEBI Charges from the Enrich Commodity Brokerage Calculator. https://www.enrichbroking.in/BrokerageCalculator.html