The Commodity Participant Association of India (CPAI) delegation asked the Finance Ministry to remove the double taxation levied on commodity traders in the form of Commodity Transaction Tax (CTT), and tax on business income, according to a report in The BusinessLine.
The report stated that the CTT is regressive according to progressive economic theory as it is a direct tax levied upfront when a transaction is made irrespective of profit or loss.
The Association said that after the introduction of the CTT in 2013, the market had fallen 63 per cent and had directly affected the traders.
The traders want the CTT to be treated as a tax. The problem is that they have to pay the CTT and a normal tax also, which causes double taxation. The CTT also increases the cost of hedging transactions, and traders fear that it would increase illegal 'dabba trading'.
The report quoted the association's presentation to the Finance Ministry that said, "We request that instead of an expense, CTT is treated as a non-refundable tax or rebate under Chapter VIII like Section 88E."
What is CTT?
The Commodities Transaction Tax was first proposed in the 2008-09 budget by then Finance Minister P Chidambaram. It is levied on equity cash and equity derivatives in the market.
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