Commodity traders oppose sercice charges in budget

Mumbai, Feb 29 (UNI) The Union budget proposals for 2008-09 have added an incidence of 12 per cent service charge and Rs 17 per lakh for commodities trading, which will increase the cost by more than 800 per cent, according to Mr Jignesh Shah, MD&CEO, Multi Commodity Exchange( MCX) of india Ltd.

''This taxation was introduced in securities market with attendant benefit of long term capital gains and allowing futures income loss to be treated as normal business income loss'', he said.

The commodities markets have not received these two incentives and have exclusively been burdened with transaction cost which will make the market inefficient compared to similar global markets. As commodity markets are more comparable to currency market, being global asset class, users are very sensitive to transaction cost up to the fourth decimal place.

''Keeping in mind the cost sensitivity of trade, without the attendant tax advantages given to stock markets along with STT, we think Indian commodity market will become inefficient and not serve its economic purpose of enabling risk management at this cost of trading which is far inefficient compared to global cost of industry and business will migrate from regulated exchanges to international markets or unofficial local market'', he said.

UNI AR NV OBB VKG1945