Allaying fears that coal miners would be hit hard by the proposal to make them share 26% of their post-tax profit with the local population, Union mines secretary S Vijay Kumar said that the burden on them would be less than that on miners of other minerals, who must earmark a sum equal to the ad valorem royalty paid on the output with the locals.
The Coal India stock fell over 8% on Friday, following the previous day?s decision on profit sharing.
?…actually, the coal ministry calculated that 26% (of profit after tax) is less than the royalty paid for coal. This is because coal prices are administered,? Kumar told FE. He added that a move was on to rationalise coal prices. The profit-sharing clause in the new mining Bill cleared by a group of ministers would now be a trigger for this. ?There is a separate push to rationalise coal prices. I think there is a Planning Commission suggestion in this regard. So, there is a move to push the increased price onto the consumer anyway,? the secretary said. The Bill will now go to the Cabinet.
Royalty is calculated on an ad-valorem basis (on the sale value exclusive of taxes) for most minerals, from under 1% to 10%. Currently, states? total royalty collection from minerals excluding coal is about R9,000 crore.