Budget 2012: CTT scan clear, commodity traders sigh with relief

Commodities traders rejoiced as trading in that segment was kept out of the purview of the transaction tax (CTT) net, something they had apprehended. What added to their celebration was that the hike in the import duty on gold would not impact the futures trading of the yellow metal on the commodities bourses, at least according to them.

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Imported gold would be expensive, but there will not be any impact in the futures market, said Anil Mishra, MD, National Multi-Commodity Exchange of India. This is because the prices of the yellow metal are largely driven by sentiments and global cues.

The UPA government, in its first innings, had announced the imposition of CTT at 0.017% (Rs 17 on a transaction worth Rs 1 lakh). But it was never levied following opposition and was ultimately scrapped.

Initial estimates reveal that, if gold’s price is taken to be Rs 30,000 per 10 gram now, after the hike in duty, retail buyers will pay about Rs 30,600 for the same amount. Historically, gold demand has been inelastic to price increases. But still, we need to keep a watch on how far the hike in duty affects (retail) consumption, said Jayant Manglik, president (retail distribution ), Religare Broking.

If the GST had been rolled out, commodities traders would have gained and there would have been an increase in volumes both in the spot as well as futures markets.

GST would pave the way for pan-India discovery of spot prices. If GST rollout happens, it would be a boost for electronic spot markets, said Anjani Sinha, MD, National Spot Exchange.