[aaykarbhavan] CBDT move to plug leakages in commodities derivative transactions

The Income-Tax Department has tightened its leash on commodities derivatives transactions put through recognised associations.

The Central Board of Direct Taxes (CBDT) has asked commodity bourses to file with the Tax Department monthly reports of client code (unique customer ID) modifications.

Reporting on client code modifications will help plug revenue leakages, say tax experts.

This move is being largely driven by the Budget 2013-14 announcement to treat commodities derivatives transactions as non-speculative transactions for income tax purposes.

All commodity derivative transactions put through recognised associations will be taxed under the business income head for income tax purposes.

By recognising them as business income, a participant in bourses will be able to set off the losses if any against any other incomes such as those from sale of property etc.

This set off benefit was not available till recently as commodity derivative trade was considered as speculative transactions for income tax purposes.

The CBDT has also now laid out the conditions for recognising an association. It is only the participants of a recognised association who can avail themselves of the new tax regime on commodity derivative transactions.

 

Regards

Prarthana Jalan

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