New Delhi: Leading agri-commodity exchange NCDEX will soon approach the Finance Ministry seeking abolition of the commodity transaction tax (CTT) on processed food items such as coffee, guar gum and sugar, a top official said on Wednesday.
"The notification (on CTT) is not consistent to the intent of the Finance Bill. We have communicated to the Finance Ministry verbally and this will be followed by written representation. We have started the process," NCDEX Managing Director In-charge Samir Shah told the agency.
From beginning of this month, the Centre has slapped CTT of 0.01 percent on non-agricultural commodities and some processed food items. It has exempted 23 agricultural commodities from the new tax.
"23 items are exempted. We feel that bulk of agricultural commodities are missing in the exempted list of items notified by the government. We will be taking up the representation to the concerned ministry soon to include more agri commodities in the list," he said.
Commodities like sugar, guar gum, coffee and refined oil are missing in the list of exempted items, he added.
On the first day of enforcement of CTT, trading volumes at its exchange platform fell by 44 percent to Rs 2,447 crore, as compared to Rs 4397 crore on June 28.
Asked if the fall in trade volumes was due to CTT, Shah said, "Traders were cautious with CTT coming into force. It is not proper to compare one day data to assess the impact of CTT. We should see for minimum three-months data."
He said the trading volumes have generally been lower in the last 10-12 months not only in India but worldwide due to lack of volatility in the commodity market.
"Reduction in volumes is driven by lack of volatility or reduced volatility and the bearish price trend. Whenever prices come down, investors in India stay away. This is something we cannot do anything about," he said.
The exchange cannot control prices. Prices are driven by demand and supply. The exchange can only provide the best trading platform when the volatility comes back, he added.
NCDEX, the second biggest commodity bourse in the country, offers futures trading contracts largely in agricultural items.
First Published: Wednesday, July 3, 2013, 15:44