There appears to be uncertainty over the implementation of the Commodity Transaction Tax from April 1 with broking firms saying the exchanges have not notified them on the issue till late Monday evening. The Finance Minister, Mr P. Chidambaram, had announced in his Budget proposal that the levy would come into effect from April 1. Mr B.C. Khatua, Chairman, Forward Markets Commission, said “Unlike the income tax, which comes into force from April 1, the commodity levy will be charged only when the Finance Bill is cleared by Parliament.”
However, most of the broking firms have decided not to levy the additional charge since they had not received any communication so far.
The exchanges preferred not to jump the gun as no direction had come from the regulator to advice member-traders. “We had few calls from the broking firms in the morning and we clarified it to them,” said an exchange official.
The three national commodity exchanges – MCX, NCDEX, and NMCE – came together to fight against the levy. However, the Government is yet to respond.
Mr Shylendra Kumar, Head, Sharekhan Commodities, said “many investors have forgotten about it. In the morning, we cautioned some of them. Since there was no notification from the exchanges, we decided not to burden our clients.”
Mr Dilip Bhatia, Director, Kotak Commodities, said, “We had called up the exchanges seeking clarification and were told not to levy the CTT. We expect it to kick in from June 1 once Parliament clears the Finance Bill.”
Clarification
Investors were as confused as the broking houses were. “I was not sure till 3.30 pm whether if I sell my buy position tomorrow, I would be charged the tax. Later, my brokers clarified,” said Mr Vikram More, a Mumbai-based investor.
Confusion
The broking firms are also not clear whether the tax would take retrospective effect once cleared by Parliament.
Mr Navin Mathur, Head, Angel Commodities, said, “There is a big confusion. To my mind, I do not think it can be levied retrospectively.”
Describing it would be a Herculean task to collect the tax if backdated, Mr Harish Galipalli, Head of Research, Karvy Commodities, said investors take into account overhead charges before they book profit. It would be close to impossible to charge them for a transaction committed a month ago.”
