SEA demands exemption of some oils and oilseeds from CTT

PUNE: The solvent extractors association of India (SEA) had demanded that soyabean oil, crude palm oil, RBD Palmolein and castor oil and cotton seed be also included in the list of commodities exempted from the commodities transaction tax.

Government has notified that commodities transaction tax (CTT) of 0.01% to be levied on all derivative contracts of non-agricultural commodities transacted through recognised commodity exchanges with effect from 1st July, 2013. However, 23 specified agri-commodities have been exempted from CTT including cotton seed oil cake, copra, rape/mustard seed, soyabean and soya meal. Certain agri-commodities like soybean oil, RBD palmolein, castor oil and cotton seed are missed out from the exemption. "Soybean oil is the major oil traded in exchanges, which has direct linkage with the farmer. Similarly, palm oil consumption in the country is 70 lakh tonnes, nearly 45% of total consumption of edible oil in the country," stated an SEA release.

Currently, there is state defined mandi tax applicable on purchase of soybeans and other oilseeds across India. "The processors also have to pay a 5% VAT on refined oil. Application of CTT for hedging on exchanges will further add to the tax burden and discourage the value chain participants from hedging their price risks on the commodity exchanges thereby exposing themselves to the uncertainties arising from the demand and supply situation in domestic and International markets," stated the release.

Solvent extractors association (SEA) has represented to the department of consumer affairs and also forward markets commission to re-look at the list of exempted agri-commodities and requested to consider to include soybean oil, crude palm oil, RBD Palmolein and castor oil and cotton seed in the list of exempted commodities.