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Budget 2013: Chidambaram introduces CTT on non-agri commodities

Budget 2013: Chidambaram introduces CTT on non-agri commodities

For the first time, a CTT of 0.01 per cent has been levied on all non agri-commodities futures, which account for more than 80 per cent of the trading volumes on the exchanges.

Much to the dismay of commodity traders and investors, the finance minister has introduced a commodity transaction tax (CTT) in the Union budget 2013-14.

For the first time, a CTT of 0.01 per cent has been levied on all non agri-commodities futures, which account for more than 80 per cent of the trading volumes on the exchanges. This will increase the cost of trading and lead to a fall in volumes. Small traders are likely to be the worst hit. "We expect volumes to tumble by 20 per cent in the commodity markets," says Naveen Mathur, Associate Director-Commodities & Currencies at Angel Broking. "I fear that the introduction of CTT may divert traders towards unauthorized and illegal trading," he adds.

Overall, it is a detrimental step for the commodity futures market which is still in its infancy.