Meaning of CTT or Commodity Transaction Tax
The CTT Tax or Commodities Transaction Tax is levied on Trades made on Commodities Exchanges akin to Securities Transaction Tax – STT on Equity Trades. It is a tax payable to the Central government by commodity traders and therefore classified as a regulatory charge.
Introduction of CTT or Commodity Transaction Tax
CTT has an interesting history. First proposed in 2008, the proposal met with vehement opposition from Commodity Exchanges. They argued that Commodity trading in India was at a nascent stage & introduction of CTT could adversely affect them. Hence the proposal was withdrawn.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.
Watch this video to understand the Basics of Commodity Trading
CTT or Commodity Transaction Tax Calculations
CTT is also charged at Rs.10 per Lakh of & only on the Sell Side Turnover.
So for instance 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.
Important Note – CTT is applicable only on non-agricultural commodities. No CTT is applicable on commodity trading of agri commodities.
Impact of CTT on Trading volumes
With the introduction of CTT in commodity trading, trading volumes on the MCX and other commodity exchanges in India have seen a dip 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 an unviable 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 SAMCO Commodity Brokerage Calculator.
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