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Union Cabinet approved hike in mining royalty rates on minerals

Aug 27, 2014 18:24 IST

The Union Cabinet on 20 August 2014 gave nod to increase the mining royalty rates on 55 items with a few exceptions like coal, lignite and sand for stowing. The rate of royalty on iron ore was raised to 15 percent from the existing 10 percent.

The Cabinet gave its nod to hike the mining royalty based on the recommendations of a 17-member study panel set up by the UPA II government in 2011. This revised royalty rates would affect almost all minerals like bauxite, limestone, copper and zinc.

This step of the government will significantly increase the annual revenue of 11 mineral-rich states by 40 percent to 15000 crore rupees. Chhattisgarh, Odisha, Jharkhand, Karnataka and Goa are among the 11 mineral-rich states.

As prescribed in the second schedule of the Mines and Mineral (Regulation and Development) Act, 1957 there are 51 minerals and the rates of royalty rates differ from mineral to mineral.

About Royalty Rates

Royalty is a tax levied by the government on miners for which it transfers the ownership rights of mines. While the royalty is collected by the states, the Centre has the power to revise them. These royalty rates are revised in every three years for major minerals. Last time it was revised in August 2009 on the basis of ad valorem taxes which is dependent on increase or decrease in mineral prices.

For government this step of royalty rates is considered as the source of revenue but on the other hand, industrialists look at it as part of production costs.

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