'Time is not yet ripe for transaction tax'

The finance ministry’s proposed move to revive Commodities Transaction Tax (CTT) has left traders apprehensive of an increase in volatility of prices, impairing price-discovery functions of India’s nascent commodity market.

“The bullion market participants especially individual investors and small retail jewellers are very cost sensitive. By increasing the cost of capital in trading, the levy would reduce market liquidity,” President of Bombay Bullion Association, Prithviraj Kothari said.

The finance ministry is contemplating levying a CTT of 0.017 per cent (Rs 17 for every Rs 100,000 of transactions) in the budget proposals for 2012-13, initially for non-agricultural commodity futures.

Ficci Secreatry General Rajiv Kumar has said that imposition of CTT would escalate the cost of transaction on the Indian exchanges and would result in volume shifts towards international exchanges.

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