The decision to impose 0.1 per cent Commodities Transaction Tax (CTT) on non-agriculture futures contracts is discriminatory, MCX chief said.

In the Budget 2013, Finance Minister P Chidambaram announced Commodities Transaction Tax (CTT) of 0.1 per cent on non-agriculture futures contracts in order to broaden its tax base, while at the same time reducing the Securities Transaction Tax (STT) to 0.01 per cent.

The announced CTT on non-agriculture futures contracts would work out to be Rs 10 for every transaction worth Rs 1 lakh.

The finance minister spared agricultural commodities traded in the futures market of a new commodity transaction tax in a bid to avoid further hike in food inflation.

However, the move encountered displeasure from some experts. Shreekant Javalgekar, managing director and chief executive of the country's leading commodity exchange MCX, "This treatment is like having STT on shares of `Company A' and no STT on `Company B'."

Explaining his point, he said that the government didn't levy transaction tax on the currency markets, despite the fact that these markets were 500 per cent larger than the commodities markets. As against 0.01 per cent for gold futures traded on the commodity futures markets, gold ETFs were being charged at 0.001 per cent.

He further said that the Commodities Transaction Tax on Indian commodity exchanges would hike the transaction cost by as much as 300 per cent, which will in turn drive the trade towards international markets.