Commodity Participants Association of India (CPAI) said the government should look at waiving the Commodity Transaction Tax to boost trading volumes.
In its Budget proposal to the Finance Ministry, CPAI has urged the government to relook at Commodity Transaction Tax (CTT) as it has yielded little revenue and destroyed national market volumes by 60 per cent.
In addition, CTT encouraged liquidity, volumes and jobs to shift outside India. ''Given low collection, the easiest way is to remove CTT,'' the association said.
Since the introduction of CTT in 2013, the volume in commodity markets has plunged by 60 per cent, while the government collected only Rs 667 crore as revenues.
In case the government wishes to retain CTT, the association has requested that CTT be treated as tax paid, not an expense (tax rebate to be allowed under Income Tax Act). This would be a correction of an unfair double taxation anomaly.
''If normal tax liability is higher than CTT paid, we will further pay the difference. Also, excess CTT paid will be non-refundable,'' CPAI President Narinder Wadhwa told PTI on Wednesday.
In addition, CPAI, the apex pan-India association of participants in commodity exchanges and commodity derivative segments, has suggested the government for reducing CTT to Rs 500 per crore, only on sale.
''The twin measures will reverse the over 60 per cent drop in market volumes, and the government will be revenue positive by Rs 183 crore,'' he added.
He urged the government to accept the request for two years on a test basis and in case of unfavourable results, revert CTT to the status quo.
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