New Delhi: The ministry of consumer affairs (MCA) has opposed the proposal to amend a law for hiking stamp duty on commodity futures, stating that the move will be a burden on the nascent market.
The ministry of finance has proposed an amendment to the century old Indian Stamp Duty Act to bring in a uniform structure on transaction of all derivatives, including commodities and stocks. It has completed discussions with states and has sought views of other ministries concerned.
“We are not in favour of the amendment because the transaction cost of commodities would increase if the stamp duty is revised to Rs 5 per lakh turnover or 0.005% from the existing 0.001%,” an MCA official told PTI.
Commodities attract multiple levies like mandi tax, purchase tax and sales tax, he said, adding that higher stamp duty will be a burden on the nascent commodities futures market.
The commodity futures market did business worth Rs 119.48 lakh crore in 2010-11.
Besides, the finance ministry has proposed changes to align the stamp duty law with contemporary requirements of the market and also to ensure increase in revenue collection of states.
Stamp duty accounts for a significant share of the tax revenues of states.
Early this year, the Maharashtra government had announced a stamp duty of 0.005% on all cash and derivatives transactions in its 2011-12 state budget. However, it had to withdraw the proposal after concerns were raised by commodity markets regulator Forward Markets Commission.
Currently, there are five national level and 18 regional commodity exchanges in the country.