Impact of transaction taxes on commodity derivatives trading in India

Arbeitspapier

Commodity derivatives were introduced in India with a dual purpose of promoting price discovery and enhancing risk management in the commodities market. A transaction tax (of 0.01 per cent) on commodity futures trading was introduced in the Union Budget 2013-14. This study examines the rationale behind such a tax. It also checks for the validity of the proposition that such taxes generate additional revenue. We conduct a 50-day and 120-day event study to assess the impact of CTT imposition on the total volume traded of a few select commodity futures as well as on the overall efficiency of the commodity market. Results for the event study suggest a significant drop in traded volumes of commodity futures such as gold, copper, crude oil and menthe oil.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 272

Classification and Topics

• Classification: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; Financial Forecasting and Simulation ; General Financial Markets: Government Policy and Regulation ; Contingent Pricing; Futures Pricing; option pricing ; General Financial Markets: Other ; Metals and Metal Products; Cement; Glass; Ceramics
• Subject: Futures Market ; Commodity Transaction Tax ; Trading Volume ; Volatility ; Liquidity ; Event Study

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ray, Saon ; Malik, Neha
• Event: Veröffentlichung
• (who): Indian Council for Research on International Economic Relations (ICRIER)
• (where): New Delhi
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/176290
• Last update: 10.03.2025, 11:43 AM CET