Check the price of commodity trade in India versus US and China; traders suggest how to cut costs

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Currently, Indian markets have very high transaction costs through CTT, GST, stamp duty, foreign exchange fees, in addition to the levy of applicable capital gains tax. (Representative image)

The Commodity Participants Association of India (CPAI) has urged the government to tackle the high cost of trading in Indian markets, resulting in drastic decline in volume and liquidity.

In a presentation to the Ministry of Finance, CPAI said the cost of executing a transaction in India across various asset classes is 4-19 times the cost of executing a comparable transaction in the United States. , China and Singapore due to the high incidence of the securities transaction tax. (STT) and the commodity transaction tax (CTT).

The association wants the government to remove or lower the rates of STT and CTT in order to boost trade volumes.

He asked the government to allow the TWU as a prepaid non-refundable tax or as a reimbursement under Section 88E instead of an expense as was the case until 2008. De Likewise, TTC should be treated as a tax paid and not as an expense.

“The high cost of transactions has led to a sharp drop in the volumes of allocated liquidity, an increase in impact costs and is a drag for hedging operators,” said CPAI, the pan-Indian umbrella association of exchange participants. commodities and commodity derivatives segments.

Currently, Indian markets have very high transaction costs through CTT, GST, stamp duty, foreign exchange fees, in addition to the levy of applicable capital gains tax.

Since the introduction of the CTT in 2013, the volume in commodity markets has fallen from Rs 69,449 crore per day in 2011-12 to Rs 27,291 crore per day in 2018-19, registering a drop of 61 % in volume.

“To make India a price fixer for most of the commodities produced or consumed in India, we need to keep our transaction costs low to be a price fixer in world markets. or traders will be attracted, ”added the association.

STT is a tax on stock transactions and is automatically deducted in advance based on a person’s turnover, regardless of profit or loss. CTT is a tax similar to STT, levied on transactions made on national commodity derivatives exchanges.

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