Full Form of CTT

What is CTT?

Commodity Transaction Tax (CTT) is a direct tax levied on transactions of commodity derivatives traded on recognized exchanges in India, primarily targeting non-agricultural commodities such as gold, silver, crude oil, and base metals. Introduced in the Union Budget 2013-14, CTT mirrors the Securities Transaction Tax (STT) applied to stock market trades and aims to curb speculative trading, generate revenue for the government, and bring transparency to commodity markets. It is applicable to futures and options contracts on domestic commodity exchanges like MCX and NCDEX, with rates varying by contract type—typically 0.01% on non-agricultural futures and 0.05% on options premiums. The tax is collected by the exchange and remitted to the government, making it a negligible cost for genuine hedgers but a disincentive for high-frequency traders. Notably, agricultural commodities are exempt to protect farmers and promote rural growth. CTT has been a subject of debate; while it supports fiscal objectives, critics argue it reduces market liquidity and participation. For competitive exams like UPSC, RBI, and SEBI, understanding CTT is crucial as it features in taxation policies and financial market regulations. Its role in formalizing India's commodity trading ecosystem underscores its significance in the broader fiscal landscape.

CTT का फुल फॉर्म

Example

The Budget reintroduced CTT on non-agricultural commodity derivatives to align with global practices and boost tax compliance.

CTT — frequently asked questions

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