Commodity Transaction Tax
A tax on the sell side of non-agricultural commodity derivative transactions on recognised exchanges.
Formula
CTT = Sell-Side Transaction Value x Applicable Rate
Unit
%
In depth
CTT is the commodity market's counterpart to the securities transaction tax, introduced in 2013 and levied on the seller in non-agricultural commodity futures. Agricultural commodities are exempt, which is a deliberate policy distinction. Like STT it is charged on turnover rather than profit, so a high-frequency commodity strategy pays it on every round trip regardless of outcome. Unlike STT, CTT paid is generally allowed as a business expense where the trading is treated as business income, which changes the after-tax arithmetic for active participants.
Worked example
At 0.01% on the sell side, a ₹20,00,000 gold futures sale costs ₹200. Repeated across forty round trips a month, that is ₹8,000 a month in tax on turnover alone.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Commodity Transaction Tax” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.