Steel secretary says strong need to rationalise royalty, offset input cost in GST

Steel Secretary Aruna Sharma today said there was a strong need to rationalise royalty on minerals and also allow offset of input costs under the Goods and Services Tax. She was speaking in Indore at the fourth national conclave on mines and minerals organised by the ministry of mines. Minister of Mines Narendra Singh Tomar was also present on the occasion.

“There is a strong need to rationalise royalty.  The industry is willing to pay royalty but there is a need to rationalise the central royalty and the District Mineral Foundation,” she said.

The central government has the power to fix and revise royalty in case of major minerals while states fix the same for minor minerals. Common major minerals are coal, chromite, diamond, gold, iron-ore, manganese ore, nickel, silver, zinc, copper, and bauxite.

Minor minerals include stone, sand, marble, slate, boulder and brick earth. Crude oil and gas form a separate category called mineral oils and government by central laws.

Different minerals attract different rates of royalty. Chromite attracts 15 percent of average sale price on ad valorem basis while 11.5 percent royalty is levied on diamonds and 15 percent on iron-ore, a key raw material for making steel.

District Mineral Foundation or DMF has been created to ensure the welfare of the people affected by mining. DMF is funded by way of contributions at the prescribed rates from holders of mining lease. It is imposed at the rate of 30 percent of the royalty for leases granted till January 11, 2015 and 10 percent for leases granted thereafter.

Royalty and DMF contributions are both outside the purview of GST and payments towards them are currently not offset under the indirect tax regime.

Sharma also mooted the idea of holding separate auctions for end users and those into mercantile mining. She also called upon the mining industry to work on removing the misconception that mining is polluting.