The Finance Bill, 2026 proposes to remove an interpretational gap in the Income-tax Act, 2025 by introducing a statutory definition of the term “commodity derivative.” While section 66(33) of the Act refers to “specified derivative transactions” and uses the expression “commodity derivative,” the term was not expressly defined in the 2025 Act, despite being defined in the Income-tax Act, 1961. This omission had the potential to create uncertainty in the tax treatment of commodity derivative transactions, particularly for determining eligibility under provisions dealing with derivatives and related taxation. To ensure consistency and continuity in tax interpretation, the amendment aligns the 2025 Act with the existing framework by adopting the meaning of “commodity derivative” and “commodities transaction tax” as assigned in Chapter VII of the Finance Act, 2013. The amendment, introduced through Clause 33, will take effect from 1 April 2026 and apply from tax year 2026–27 onwards, thereby providing clarity and reducing scope for disputes.
Providing definition of “commodity derivative”
Section 66(33) of the Act provides for definition of “specified derivative transaction”. The said definition uses the term “commodity derivative”. The term “commodity derivative” has been defined in the Income-tax Act, 1961, however, it is not defined in the Income-tax Act, 2025.
2. To align with the provisions of Income-tax Act, 1961, it is proposed to provide definition of “commodity derivative” as has been provided in the said Act.
3. It is proposed to amend section 66 of the Income-tax Act, 2025.
4. This amendment will take effect from 1st April, 2026.
[Clause 33]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 33 of the Bill seeks to amend section 66 of the Income-tax Act, 2025 relating to interpretation of certain expression in Part D of Chapter IV.
It is proposed to provide the definition of commodity derivative therein.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in relation to the tax year 2026-2027 and subsequent years.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
33. Amendment of section 66.
In section 66 of the Income-tax Act, for clause (4), the following clause shall be substituted, namely:—
‘(4) “commodities transactions tax” and “commodity derivative” shall have the same meanings as respectively assigned to them in Chapter VII of the Finance Act, 2013;’.
