Commodity Trading Tax Calculator
Commodity derivatives are taxed like F&O. What they add is commodities transaction tax — charged on your sales whether or not you made anything, at five different rates.
What the Commodity tax calculator does
A commodity tax calculator shows what MCX and NCDEX trading costs. Commodity derivatives are non-speculative business income taxed at your slab, with losses carried forward eight years. On top sits commodities transaction tax, charged on your sales whether or not you profited — 0.01% on futures, 0.05% on selling options, nil on agricultural contracts.
Commodity trading is taxed like F&O. The difference is the transaction tax.
Proviso (e) to section 43(5) takes an eligible transaction in commodity derivatives on a recognised association out of speculation. So this is non-speculative business income: taxed at your slab, expenses deductible, losses used to reduce any income except except salary and carried forward 8 years. That is exactly the F&O position and this page does not restate it at length.
What commodities have that equity derivatives do not is commodities transaction tax — charged on the sell side under Chapter VII of the Finance Act 2013, due whether or not you made anything, and with a rate card that is not flat.
A statement of how section 43(5) classifies commodity derivatives, not a computation on your figures. An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
Your inputs
What do you trade?
CTT is 0.01% on futures, 0.05% on selling an option, and nil on agricultural contracts.
The favourable differences across the year.
The unfavourable differences, as a positive number.
The notional value of your sales. CTT is charged on this, not on your profit — so it rises with activity alone.
Brokerage, exchange and SEBI charges, GST, stamp duty. CTT is added to these, not included in them.
Do you take physical delivery?
Many MCX metal contracts are compulsory delivery. Taking delivery brings GST questions this page flags but does not price.
Out of reach of a business loss, as on the F&O page.
A commodity loss can be used to reduce this in the same year.
Your income tax slab
Business income, so your marginal rate applies.
Which tax regime are you on?
Carried for consistency with the other calculators.
Will the return be filed by the due date?
Section 80 forfeits the carry-forward where the return misses the section 139(1) date.
Transaction tax charged on a year that made no profit
₹5,000
CTT is charged on ₹5,00,00,000 of sales at 0.01%, regardless of the outcome. The year lost ₹2,55,000 and this was still payable — it is a tax on activity, not on profit.
- Profits on winning trades
- ₹5,00,000
- Losses on losing trades
- − ₹7,00,000
- Result before costs
- − ₹2,00,000
- Other trading costs
- − ₹50,000
- CTT (0.01% of sales)
- − ₹5,000
- Loss for the year
- − ₹2,55,000
Commodity derivatives are non-speculative business income and this is arithmetic on the figures you entered, not a computation of your return. An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
CTT is charged on what you traded, not on what you made
Chapter VII of the Finance Act 2013 charges commodities transaction tax on the sell side of a commodity derivative. Like securities transaction tax it is a charge on turnover, so it falls due on a losing trade exactly as on a winning one and grows with how actively you traded rather than with how well.
It is at least deductible. Section 36(1)(xvi) allows CTT as a business expense, which is more than section 48 does for STT when computing a capital gain — there it reduces nothing at all.
Sell-side value traded
₹5,00,00,000
The base CTT is charged on. Not your profit, and not the audit turnover.
CTT at 0.01%
₹5,000
Payable on the sale whatever the outcome of the trade.
Deducting it is worth
₹0
No profit this year, so no tax for it to reduce — but it deepens the loss rupee for rupee.
An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
The same book, in each segment — ranked on what you keep
Selling an option costs 0.05% against 0.01% for a future on the same value — five times as much, for two strategies that look equivalent on a screen. Agricultural contracts pay nothing.
Metals, energy — futures
− ₹2,55,000
₹5,000 of CTT, ₹0 of income tax. ← what you selected.
Metals, energy — options
− ₹2,75,000
₹25,000 of CTT, ₹0 of income tax.
Agricultural contracts
− ₹2,50,000
₹0 of CTT, ₹0 of income tax.
No segment made a profit this year, so no income tax arises in any of them and the ranking above is simply the CTT. The interaction is worth knowing for a year that does make money: because CTT is deductible, paying less of it raises taxable income, so the agricultural trader ends up paying more income tax than the metals trader on identical trades and is nonetheless better off. The saving is only ever worth its after-tax part.
An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
The agricultural exemption once cost far more than it saved
Proviso (e) as originally enacted only reached a commodity derivative “which is chargeable to commodities transaction tax”. An agricultural contract is not chargeable to CTT — so it fell outside the proviso, and outside the proviso it was speculative.
The exemption that saved the transaction tax cost the classification, which is worth much more. A speculative loss reaches no other income at all and carries forward four years instead of eight. The Finance Act 2018 closed it from assessment year 2019-20, so both segments are non-speculative today.
CTT an agri contract pays
₹0
Then as now, an agricultural contract is outside commodities transaction tax entirely.
Carry-forward before 2018
4 years
Speculative, and reaching only future speculative profits.
Carry-forward today
8 years
Non-speculative, against any business income. The amendment did the work.
This is history rather than live law, and it is here for one practical reason: articles written before 2018 describing agricultural commodity trading as speculative are still online and still being read. If you find one, it was true when it was written.
An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
The loss behaves exactly as an F&O loss does
Section 71 sets it off against any head except salary this year; section 72 carries the balance forward 8 years against business income. Section 80 with 139(3) forfeits that carry-forward if the return misses the due date — a date, not a sliding scale — while the reduction made this year survives.
Used to reduce your other income now
₹1,00,000
Against your non-salary income, under section 71.
Blocked from your salary
₹1,55,000
Section 71(2A). No business loss reaches salary.
Carried forward
₹1,55,000
Worth up to ₹48,360 against business profits.
An estimate on the transactions available to us, not a tax computation or filing advice. Confirm the position with a qualified tax adviser before relying on it.
What this assumes
- An eligible transaction on a recognised association. Proviso (e) applies to commodity derivatives traded on a recognised association such as MCX or NCDEX. Off-exchange commodity contracts are not covered by it.
- A trader, not a hedger. Proviso (a) takes hedging contracts entered in the course of a manufacturing or merchanting business out of speculation by a different route. A jeweller hedging gold reaches the same answer through that proviso, and the reasoning on this page is not theirs.
- CTT on the sell side only. The rate card also charges 0.0001% to the purchaser where a commodity option is exercised, which this page does not model. Where you both write and exercise options the real CTT is a little higher than shown.
- Turnover for audit is not the CTT base. The audit test under section 44AB uses the sum of absolute differences and the threshold is ₹10,00,00,000 where the cash test is met. The far larger sell-side value on this page is the CTT base and nothing else. If you also trade equity F&O or intraday, section 44AB looks at your combined business turnover.
- A flat marginal rate. The result is taxed at the single rate selected plus 4% cess rather than run through the slabs, and surcharge is excluded.
- Books of account may be required under section 44AA and the return is ITR-3. Advance tax in four instalments applies to business income and is not modelled.
No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Commodity derivatives are leveraged and can lose more than the amount committed to them. GrowIQ Capital is a mutual fund distributor, does not deal in commodities, does not recommend them, and does not provide tax advice — this is arithmetic on the figures you entered, and the audit, GST and delivery questions in particular belong with a qualified chartered accountant rather than a web page.
How the commodity tax calculation works
Business income = (favourable − unfavourable differences) − expenses − CTT, taxed at SLAB. CTT = 0.01% futures / 0.05% options on SALES, nil on agri.
Proviso (e) to section 43(5) takes an eligible transaction in commodity derivatives on a recognised association out of speculation, so commodity trading is non-speculative business income on exactly the F&O footing: the trader's slab rate plus cess, expenses deductible, losses set off under section 71 against any head except salary and carried forward eight years under section 72, with section 80 forfeiting that carry-forward where the return misses the section 139(1) date. What commodities add is commodities transaction tax. Chapter VII of the Finance Act 2013 charges CTT on the sell side of a commodity derivative, which makes it a tax on turnover rather than on profit — it falls due on a losing trade exactly as on a winning one, and grows with how actively you traded rather than how well. The rate card is not flat: 0.01% on the sale of a non-agricultural future, 0.05% on the sale of an option, which is five times as much for two strategies that look equivalent on a screen, and 0.0001% to the purchaser where an option is exercised. Agricultural commodity derivatives are outside CTT entirely. CTT is deductible under section 36(1)(xvi), which is more than section 48 allows for securities transaction tax when computing a capital gain. That deductibility creates an effect worth stating carefully: because CTT reduces taxable income, not paying it RAISES taxable income, so an agricultural trader pays more income tax than a metals trader on identical trades and is nonetheless better off. At the 30% slab a ₹5,000 CTT saving is worth about ₹3,440 after tax, and any comparison of the segments ranked on tax paid rather than on what is kept would put the exempt trader last, which is exactly backwards. The agricultural exemption also has a history that still misleads. Proviso (e) as enacted reached only a derivative chargeable to CTT, so an agricultural contract fell outside it and was speculative — the exemption saved the transaction tax and cost the classification, which is worth much more, since a speculative loss reaches no other income and carries forward four years rather than eight. The Finance Act 2018 fixed this from assessment year 2019-20. Turnover for the section 44AB audit test is the sum of absolute differences, not the far larger sell-side value CTT is charged on. Taking physical delivery, which many MCX metal contracts now require, moves the transaction into a dealing in goods and brings GST questions this arithmetic does not reach.
Frequently asked questions
Is commodity trading speculative income?
No. Proviso (e) to section 43(5) takes an eligible transaction in commodity derivatives on a recognised association such as MCX or NCDEX out of speculation, so it is ordinary non-speculative business income. That means your slab rate, deductible expenses, losses set off against any head except salary, and an eight-year carry-forward under section 72 — the same footing as equity F&O, and a much better one than intraday equity.
What is CTT and when do I pay it?
Commodities transaction tax, charged under Chapter VII of the Finance Act 2013 on the sell side of a commodity derivative. It is a tax on turnover rather than on profit, so it falls due on a losing trade exactly as on a winning one and grows with how actively you traded rather than how well. It is deductible as a business expense under section 36(1)(xvi), which is more than section 48 allows STT against a capital gain.
How much is CTT?
0.01% on the sale of a non-agricultural commodity future, payable by the seller. 0.05% on the sale of a commodity option — five times the futures rate, for two strategies that look equivalent on a screen. 0.0001% where an option is exercised, payable by the purchaser. Agricultural commodity derivatives are outside CTT entirely.
Do agricultural commodities pay CTT?
No, and today that is a straightforward saving. It was not always. Proviso (e) originally reached only a commodity derivative chargeable to CTT, so an agricultural contract fell outside it and was therefore speculative — the exemption that saved the transaction tax cost the classification, which is worth far more. The Finance Act 2018 closed that from assessment year 2019-20, so both segments are non-speculative now.
Does saving CTT actually leave me better off?
Yes, but by less than the CTT itself, and the arithmetic surprises people. Because CTT is deductible, not paying it raises your taxable income — so an agricultural trader pays more income tax than a metals trader on identical trades and is still ahead. At the 30% slab a ₹5,000 CTT saving is worth about ₹3,440 after tax. Comparing segments on tax paid would rank the exempt one last, which is backwards.
What happens if I take physical delivery?
You move outside what a derivatives calculator can tell you. Many MCX metal and energy contracts are compulsory delivery, and once metal actually changes hands the transaction becomes a dealing in goods rather than a derivative settlement. That brings GST, registration questions and year-end stock valuation. It is not a small overlay — speak to a chartered accountant before the year closes rather than after.
Will I need a tax audit for commodity trading?
The test is on turnover computed as the sum of absolute favourable and unfavourable differences, not the sell-side value CTT is charged on, which is many times larger. The threshold is ₹10 crore where cash receipts and payments are within 5%, which commodity trading satisfies because it settles through a broker. If you also trade equity F&O or intraday, section 44AB looks at your combined business turnover rather than each stream separately.
GrowIQ Capital provides financial data analytics, market information and educational content. We are not a SEBI-registered Investment Adviser or Research Analyst. Nothing on this platform constitutes investment advice or a recommendation to buy or sell any security. No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Past performance is not indicative of future returns and does not guarantee future results.