New Delhi (PTI): The government today abolished the Commodity Transaction Tax (CTT) that was announced in the Budget last year, but was yet to be implemented and the commodity exchanges rejoiced the decision.

Finance Minister Pranab Mukherjee announced the scrapping of the CTT while presenting the Budget for 2009-10. He said the decision is in step with the recommendation of the Prime Minister's Economic Advisory Council.

The government had proposed 0.017 per cent as the CTT (Rs 17 on the transaction value of every Rs one lakh trade on commodity exchanges).

The CTT was announced in line with the Security Transaction Tax (STT) in the 2008-09 Budget by then Finance Minister P Chidambaram but was not notified following stiff opposition from regulators and exchanges.

Reacting to the decision, commodity market regulator FMC Chairman B C Khatua said, "We are very happy for industry."

Expressing satisfaction, a spokesperson with the country's largest commodity exchange MCX said, "Thanks to the government for taking the decision. This will make the domestic market more efficient to compete globally and risk management will become more effective."

Similarly, leading farm commodity exchange NCDEX spokesperson Madan Sabnavis said, "This is a blessing for the entire commodity market. We were eagerly looking for this. It will restore confidence in the market."

Echoing the sentiment, the country's third-largest commodity bourse NMCE Managing Director Kailash Gupta said, "We are grateful to the government for considering our request. Dispelling earlier confusion, today's move brings clarity that the CTT won't be implemented".

Even the Consumer Affairs Ministry was not in favour of imposing the CTT as it felt this tax would hurt the growth of commodity futures markets.