Rationalisation of the provisions relating to Commodity Transaction Tax
The existing clause (7) of section 116 of the Finance Act, 2013 provides the definition of “taxable commodities transaction” to mean a transaction of sale of commodity derivatives in respect of commodities, other than agricultural commodities, traded in recognised association.
In order to align the definition of “taxable commodities transaction” with instruments allowed for transaction in commodity derivatives, it is proposed to amend the clause (7) of section 116 so as to include “options in commodity futures” in the definition of “taxable commodities transactions”.
The existing section 117 of the Finance Act, 2013 provides the rate at which a commodities transaction tax in respect of every commodities transaction, being sale of commodity derivative shall be chargeable and such tax shall be payable by the seller.
In order to propose rates for option on commodity derivative, it is proposed to amend the provisions of section 117 so as to prescribe the rate at which sale of an option on commodity derivative shall be chargeable and such tax shall be payable by the seller.
It is further proposed to amend the provisions of section 117 so as to prescribe the rate at which sale of an option on commodity derivative, where option is exercised, shall be chargeable and such tax shall be payable by the purchaser.
The existing section 118 of the Finance Act, 2013 provides the value of taxable commodities transactions, being commodity derivative and chargeable under section 117 of the Finance Act, 2013.
It is proposed to amend the provisions of section 118 so as to include the value of taxable commodities transaction, being option on commodities, chargeable under section 117 of the Finance Act, 2013, in the said section.
These amendments will take effect from 1st April, 2018, and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years.
Extract of Clause 215 of Finance Bill 2018
Clause 215 of the Bill seeks to amend sections 116, 117, 118 and 128 of the Finance Act, 2013 relating to commodities transaction tax.
Clause (7) of the section 116 defines “taxable commodity transaction”. It is proposed to amend the said clause so as to include “option on commodity derivatives”.
Section 117 of the said Act provides the rate at which a commodities transaction tax shall be chargeable in respect of every taxable commodities transaction, being sale of commodity derivative and that such tax shall be payable by the seller.
It is proposed to substitute the said section so as to provide the rate at which the commodities transaction tax shall be chargeable in respect of the taxable commodities transaction, which shall be payable by the seller or purchaser, as the case may be.
Section 118 of the said Act provides the value of taxable commodities transactions, which is chargeable under section 117 on sale of commodity derivative.
It is proposed to substitute the section 118 so as to provide that the value of taxable commodities transaction which is chargeable under section 117 on sale of commodities.
Section 128 of the said Act provides that the provisions of certain sections of the Income-tax Act, as specified therein, shall apply, so far as may be, in relation to commodities transaction tax, as they apply in relation to income-tax.
It is proposed to amend the said section so as to include reference of section 119 of the Income-tax Act also.
These amendments will take effect from 1st April, 2018.
