The mines ministry is looking at the industry's proposal to classify royalties from mines as input cost under the Goods and Services Tax, a top official said today.
The mines ministry is looking at the industry’s proposal to classify royalties from mines as input cost under the Goods and Services Tax, a top official said today. Once royalties are considered as input cost, then entities would be able to claim the benefit of input tax credit under the indirect tax regime.
“There is a strong request from the industry if this royalty can be included as a form of input. Can this be treated as input and be part of the input cost? This is something we are working on. The mining industry is ready to pay the royalty. There is a case to merge everything and put an amount to it,” Steel Secretary Aruna Sharma said here. She was speaking during National Conclave on Mines and Minerals.
“This is the request we have put it (with) the revenue department as well. This can be offset as input cost. Input is at 5 per cent (GST slab) and steel sector is at 18 per cent. This will get offset in that five per cent. Today iron ore, manganese are all treated as inputs. This royalty will come under input. “The advantage is that you will get input tax credit on it. The other advantage of rationalisation of this under one group is that accounting becomes easier,” she said.
Sharma further said there will be very smooth transition of those iron ore mining leases, which are coming to an end in 2020. The Centre, she said, has asked states to speed up work so that output from the iron ore mining leases, which are expiring in 2020 is not affected.
During the Conclave, Niti Aayog CEO Amitabh Kant said there is a need to overhaul the MMDR Act (Mines and Minerals (Development and Regulation) Act) again. He also said there is a need to make the Act easy and simple.
All the approvals concerning the mines should be taken before the mineral blocks are auctioned, he added. The government had earlier said that the conclave will also help in expediting auctions and bring in greater participation from the stakeholders.