New Delhi, April 27: Industry chambers have raised their voices against the commodity transaction tax, ahead of the passage of the budget tax proposals this week.

Two apex bodies — the Confederation of Indian Industry (CII) and the Associated Chambers of Commerce and Industry of India (Assocham) — have requested the government to reconsider the tax.

However, officials said their plea was unlikely to be accepted, as the tax replicated the securities transactions tax imposed on share trading in the stock markets earlier.

The CII said the proposed commodity transaction tax would increase the cost of transactions in the organised commodities market and open up arbitrage possibilities.

The industry body said the commodities markets were already grappling with many levies such as the central sales tax, the value-added tax and excise and customs duties.

Assocham said the tax would make the markets unviable.

However, government officials said the tax would represent a small percentage of the total market turnover.

The total turnover of all commodity exchanges is around Rs 40,00,000 crore per annum. If the tax is imposed at the rate of 0.017 per cent and the turnover remains at the current level, maximum revenue collection will be Rs 680 crore.

Both the chambers said that since the tax would be levied on sellers, a farmer selling a futures contract to guard against price risk would be required to pay the tax.

“This seems to be a regulatory inconsistency, because according to the farm marketing act, no tax, cess or a mandi fee is payable by the farmers,” Assocham said.

Government officials said farmers rarely participated in commodities trading. Invoking farmers’ rights against the tax was not justifiable.

The CII said the tax would lead to a greater divergence between spot and futures prices and send wrong price signals to the physical markets that are outside the purview of the electronic exchanges.