Cen­tre wants roy­alty, auc­tion fee un­der GST

Business Standard - - FRONT PAGE - MEGHA MANCHANDA

In a move that could make ac­count­ing sim­ple for cal­cu­lat­ing roy­al­ties and auc­tion prices of mines, the min­istry of steel has made a case for sub­sum­ing both in the GST. “Roy­alty is a big con­cern (for in­dus­try) and we need to ra­tio­nalise roy­alty and auc­tion money, which can then be­come part of in­put credit,” Union Steel Sec­re­tary Aruna Sharma said on Fri­day at the Na­tional Con­clave on Mines and Min­er­als. MEGHA MANCHANDA writes

In a move that could make ac­count­ing sim­ple for cal­cu­lat­ing roy­al­ties and auc­tion prices of mines, the min­istry of steel has made a case for sub­sum­ing both in the goods and ser­vices tax (GST).

“Roy­alty is a big con­cern (for in­dus­try) and we need to ra­tio­nalise roy­alty and auc­tion money, which can then be­come part of in­put credit,” Union Steel Sec­re­tary Aruna Sharma said on Fri­day at the Na­tional Con­clave on Mines and Min­er­als. Cur­rently, min­er­als like iron ore and man­ganese, used to make steel, are taxed at 5 per cent un­der GST, while fin­ished steel is in the 18 per cent bracket.

There is a need to ra­tio­nalise auc­tion prices and roy­al­ties paid on min­er­als, and to sub­sume roy­al­ties, auc­tion prices and the district min­eral fund to ease the min­ing busi­ness, she said.

The min­istry is pre­par­ing a draft pro­posal on this and, once done, will be sent to the Depart­ment of Rev­enue in the Min­istry of Fi­nance. Satish Pai, manag­ing di­rec­tor, Hin­dalco, said: “Many tax and du­ties are charged (on min­ing). It is a bet­ter idea that all of them are sub­sumed un­der one um­brella tax.” Cur­rently, roy­alty on iron ore in In­dia is levied at 15 per cent ad val­orem.

Ac­cord­ing to Pratik Jain, part­ner, in­di­rect tax, PwC, In­dia, re­duc­tion in the GST rate on steel per se from 18 per cent to 12 per cent is fea­si­ble. “Min­ing roy­alty comes un­der the purview of states and they will have to come on board if it is to be sub­sumed in the GST. They might ask the Cen­tre to com­pen­sate them for this loss as well. There­fore, this would need a de­tailed de­lib­er­a­tion and con­sen­sus build­ing, which is likely to take time.”

States re­ceived ~148.95 bil­lion in 2017-18 as roy­alty rev­enue. “We have won three lime­stone blocks in the past two years and are look­ing for more to meet our ce­ment ex­pan­sion plan but the gov­ern­ment needs to re­solve is­sues of high trans­fer charges and for­est clear­ances for mines,” said Ma­hen­dra Singhi, group chief ex­ec­u­tive of­fi­cer, Dalmia Bharat Ce­ment.

In his ad­dress, Union Mines Min­is­ter Naren­dra Singh To­mar said 45 min­eral blocks auc­tioned earned ~1.55 tril­lion, and work on 11 of those blocks would com­mence soon. He added 102 fresh min­eral blocks were ready for auc­tion. The mines min­istry has asked states to ap­proach po­ten­tial in­vestors.

Pra­full Pat­naik, pres­i­dent, Fed­er­a­tion of In­dian Min­eral In­dus­tries, said in the up­com­ing auc­tion of min­ing blocks, all ap­provals such as en­vi­ron­ment clear­ance and for­est clear­ance should be given quickly.

Min­er­als like iron ore and man­ganese, used to make steel, are taxed at 5 per cent un­der GST

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