DEDUCTION FOR COMMODITIES TRANSACTION TAX

DEDUCTION FOR COMMODITIES TRANSACTION TAX

HOW TO TAKE DEDUCTION FOR COMMODITIES TRANSACTION TAX PAID IN RESPECT OF TAXABLE COMMODITIES TRANSACTIONS [SECTION 36(1)(XVI)]


(i) The Finance Act, 2013 has introduced a new tax called Commodities Transaction Tax (CTT) to be levied on taxable commodities transactions entered into in a recognised association, vide Chapter VII of the Finance Act, 2013.

(ii) For this purpose, a ‘taxable commodities transaction’ means a transaction of sale of commodity derivatives in respect of commodities, other than agricultural commodities, traded in recognised associations.

(iii) CTT is to be levied at 0.01% on sale of commodity derivative from the date on which Chapter VII of the Finance Bill, 2013 comes into force by way of notification in the Official Gazette by the Central Government. CTT is to be paid by the seller.

(iv) A “commodity derivative” means –

(1) A contract for delivery of goods which is not a ready delivery contract

(2) A contract for differences which derives its value from prices or indices of prices -

(i) of such underlying goods; or

(ii) of related services and rights, such as warehousing and freight; or

(iii) with reference to weather and similar events and activities having a bearing on the commodity sector.

DEDUCTION FOR COMMODITIES TRANSACTION TAX

(v) Consequently, new clause (xvi) has been inserted in section 36(1) to provide that an amount equal to the CTT paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year shall be allowable as deduction, if the income arising from such taxable commodities transactions is included in the income computed under the head “Profits and gains of business or profession”.

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