CoalMin seeks Cabinet nod for new ad-valorem royalty regime

In a note to the Cabinet Committee on Economic Affairs (CCEA) early this week,coal minister Sriprakash Jaiswal has sought the nod for charging the royalty on coal and lignite at the rate of 14 per cent and 6 per cent respectively,as recommended recently by a Study Group of the ministry on royalty-related issues. The proposal,which has already been endorsed by the finance ministry and the Planning Commission,would benefit states such as Orissa,Jharkhand,Andhra Pradesh,Tamil Nadu,Madhya Pradesh,Uttar Pradesh,Maharashtra and Assam. The West Bengal government,however,will not be a beneficiary. “The average increase on their revenue would be 17.31 per cent for coal and 14.53 per cent for lignite. When implemented,these states will earn a revenue of about Rs 6,980 crore as against Rs 5,950 crore currently. “Once the West Bengal government abolishes its taxes,it will also start benefiting from the proposed regime” Jaiswal told The Indian Express.

“Taking into consideration the submissions made by all stakeholders,the interests of the states,consumers and the national economy,the Study Group concluded that this is the right time for switching over to a full-fledged ad-valorem regime of royalty on coal and lignite,” Jaiswal said.

When asked how his ministry would calculate the royalty for captive coal mines,as most of these captive block holders treat fuel as a part of their overall production cost,Jaiswal said the basic pithead price of coal and lignite,as reflected in invoices (excluding taxes,levies and other charges) for a commercial mine nearest to the said captive mine,would provide the benchmark price. The minister said Section 9(3) of the Mines and Minerals (Development & Regulation) Act 1957 prevents the Central government from enhancing the rates of royalty in respect of any minerals including coal more than once during any period of three years.