New mineral policy to set out liberal royalty structure, says joint secretary

The new National Mineral Policy will lay out a liberal royalty structure, Bipul Pathak, Joint Secretary in the Ministry of Mines said today in Delhi. Pathak said the new policy would take cognisance of the recommendations of the Committee on Royalties and other levies with a view to putting a liberal structure in place.

The new policy is expected to be out in two months, he said.

Last month, speaking at the fourth national conclave on mines and minerals organised by the ministry of mines, at Indore, Steel Secretary Aruna Sharma had said there was a strong need to rationalise royalty on minerals and also allow offset of input costs under the Goods and Services Tax.

“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 the 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.