Commodities Transaction Tax is applicable w.e.f. 01.04.2009

45. Commodities Transaction Tax

45.1 Chapter VII of the Finance Act, 2008 has introduced a new tax called Commodities Transaction Tax (CTT) to be levied on taxable commodities transactions entered in a recognized association.

45.2 ‘Taxable commodities transaction’ has been defined to mean a transaction of purchase or sale in a recognized association of –

 (i) Option in goods; or

(ii) Option in commodity derivative; or

(iii) any other commodity derivative.

 45.3 The tax is levied at the rate, given in the Table below, on taxable commodities transactions undertaken by the seller or the purchaser, as the case may be, as indicated hereunder:-

45.4 The provisions with regard to collection and recovery of CTT, furnishing of returns, assessment procedure, power of assessing officer, chargeability of interest, levy of penalty, institution of prosecution, filing of appeal, power to the Central Government, etc. have also been provided.

45.5 Applicability: This tax will be levied from the date on which Chapter VII of the Finance Bill, 2008 comes into force by way of notification in the official Gazette the Central Government.

45.6 Further, section 36 of the Income-tax Act has been amended to provide that any amount of commodities transaction tax paid by the assessee during the year in respect of taxable commodities transactions entered into in the course of business shall be allowed as deduction subject to the condition that such income from taxable Commodities transactions is included under the head ‘profits and gains of business or profession’.

45.7 Applicability: This amendment in section 36 of the Income-tax Act has been made applicable with effect from the 1st day of April, 2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years.