Archive for the 'Duties' Category

Mine reserves; mining leases; revenue from mines: from Pratisruti Plus May 1-15 issue

Coal, Duties, Export duties, Iron Ore, MINES and MINERALS, Mining royalty, Taxes Comments Off on Mine reserves; mining leases; revenue from mines: from Pratisruti Plus May 1-15 issue

Following are some tables from Pratisruti Plus May 1-15th issue.


Miner’s view on iron ore export duty

Duties, Export duties, Iron Ore, Mining royalty Comments Off on Miner’s view on iron ore export duty

Livemint reports the view of miner’s on the iron ore export duty levied by many states. Following are excerpts of that report.

Miners on 8 July demanded the duty on iron ore exports be rolled back, saying it could result in revenue loss of Rs4,554 crore if exports slumped by 30%.
“Iron ore export duty has since been reduced to Rs50 a tonne on fines of 62% and below only. In this context, we feel export duty has achieved none of its objectives,” …

… said there could be a revenue loss of Rs4,554 crore in case of a 30% reduction in exports and a loss of Rs2,642 crore in case exports dipped 20%.

“We also feel imposition of export duty will roll back and throttle all initiatives taken by the mining industry. In fact, ore exporters are losing between Rs200 to Rs300 a tonne owing to rupee appreciation,” …

… argued that the current system of computing the mineral royalty ad valorem is unreasonable. He sought its abolition and suggested the government instead introduce a ‘fixed price’ method to calculate royalty.

Besides the royalty, mineral-rich states have imposed an additional burden on mining industry by levying land tax and peripheral development tax, Sahni said and pointed out that the Jharkhand government has levied land tax at 5% of the commercial value whereas Orissa government has asked the miners to pay 5% of their annual profits for the peripheral development fund.

Similarly the Rajasthan government also has levied mineral-wise land tax at rates varying from Rs10 to Rs100 per sq m, Sharma said. “We feel prima facie, such taxes are not legally in line with the provisions of MMDR Act and may deserve reconsideration,” he pointed out.

Low spending on exploration, delays in clearing applications and difference in fiscal policies pursued by the Centre and states were key impediments to foreign investment in the mining sector. Baldota said the government would have to expeditiously clear applications for prospecting licences and reconnaissance permits.
“The emphasis should be to increase the mineral production rather than enhancing the rates of royalty as being advocated by the states. While computing royalty on ad valorem basis, states add 20% of benchmarked value in royalty to be paid by the miners,” Sahni said.

“This practice is not reasonable and has no basis,” he said. “FIMI would like to request the Mines Ministry for deletion of 20% of the benchmark value in the royalty payable by the mine owners,” he said.

Baldota said no mining lease should be granted without first granting prospecting licence and ensuring prospecting operations within the granted area are duly carried out.

The FIMI is of the opinion that leases which are due for renewal and have total surface area of up to 50 hectares should not attract the provision of public hearing that environmental clearance should not be insisted upon for prospecting licence as the forest degradation at this stage is nil or minimal, he added.

The miner’s demands as stated above is completely against the interest of states.

States may get shares of export duty levied on Iron ores

Duties, Iron Ore, Mining royalty 1 Comment »

Economic Times reports that central government is mulling to share with states the export duty that it levies on export of iron ores. If this happens this will add to the revenue of mineral rich states like Orissa. Following are some excerpts of the above mentioned report.

The Centre may consider sharing a portion of the recently imposed export duty on iron ore with states. The move is aimed at providing additional revenues to mineral-rich states, where royalty rates have remained abysmally low. Resentment expressed by several states over the Centre’s decision to pocket the entire levy on the mineral may also have swayed the Union government.

This year’s Budget has imposed an export duty of Rs 50 per tonne on iron ore fines with less than 62% iron content and Rs 300 for the remaining ore. The Centre expects to collect over Rs 2,000 crore from this duty. Even if half of it is shared, mineral-rich states — including Jharkhand, Chhattisgarh, Orissa and Karnataka — could get over Rs 1,000 crore. This would be four times the Rs 250 crore that states receive annually as royalty on iron ore.

“Minerals belong to the states and there is no reason why the Centre should levy a duty and pocket all its benefits. The idea behind the duty was to create a deterrence for exports. The Centre should either pass on the entire collection from this duty to states or share a substantial portion with them,” a Planning Commission official said.

At earlier meetings on the subject of iron ore exports, a few states raised the issue of sharing the export duty and changing royalty rates on minerals from the present specific duty to ad valorem duty. In fact, the Hoda committee, which framed the new mineral policy, has also recommended that royalty should shift to ad valorem rates benchmarked against Western Austrian levies, which works out to about 7.5% of the per-tonne price of minerals.