Transaction of commodity derivatives


Transaction of commodity derivatives

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Income Tax
Transaction in respect of commodity derivatives to be treated as non speculative transaction only when such transaction is liable to CTT (Section 43(5)]

Transaction in respect of commodity derivatives to be treated as non speculative transaction only when such transaction is liable to CTT (Section 43(5)] [W.r.e.f. A.Y. 2014-15]

 

The existing provisions contained in clause (5) of section 43 define the term

 

speculative transaction. The proviso to the said clause (5) excludes certain category

 

of transactions as speculative transactions.

 

Finance Act, 2013 made a provision for levy of commodities transaction tax on

 

commodity derivatives in respect of commodities other than agricultural

 

commodities. As a consequence to the levy of commodities transaction

 

tax, clause (e) was inserted in the proviso to section 43(5) to provide that

 

eligible transaction in respect of trading in commodity derivatives carried

 

out in a recognised association shall not be considered as speculative

 

transaction. Vide Circular No. 3 dated 24-01-2014 explaining the provisions

 

of the Finance Act, 2013, it was clarified that the eligible transaction shall include

 

only those transactions in commodity derivatives which are liable to commodities

 

transaction tax.

 

Accordingly, clause (e) of the proviso to the said clause (5) has been amended so as to provide that eligible transaction in

 

respect of trading in commodity

 

derivatives carried out in a recognised association and chargeable to commodities transaction tax under Chapter VII of the

 

Finance Act, 2013 shall not be considered to be a speculative transaction.  

 

 

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