Consumer Affairs Ministry does not want tax on commodity ...

Tuesday, 07 February 2012 11:13

India's Consumer Affairs Ministry does not favor adopting a transaction tax affecting commodity derivatives, market experts have told the The Hindu Business Line.

At a recent meeting between Union Finance Minister Pranab Mukherjee and Minister of State for Consumer Affairs K.V.Thomas, the two finance officials stated their opposition to the tax policy, sources told the media outlet.

While a securities transaction tax (STT) is currently levied on equity futures, both currency and commodity derivatives trades are untaxed, and the growth of contracts that allow market participants to hedge commodities could be undermined by any taxes affecting trades of the securities, the media outlet reports.

A recent decline in trading volumes for equity futures has motivated the exchanges trading these contracts to propose the repeal of the STT, according to the media outlet. The odds of the? Finance Ministry at least reducing the burden of the tax at the next budget meeting are high, The Economic Times reports.

There is widespread disagreement over how these risk management tools should be taxed, as market experts in the trading of commodities derivatives suggest that contracts allowing participants to hedge raw materials should not be given the same treatment as equity derivatives, according to The Hindu Business Line.?

Source: http://derivative-news.fincad.com/derivatives-regulations/consumer-affairs-ministry-does-not-want-tax-on-commodity-derivatives-2097/

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