Government rescinds notification on revision of royalty rates for non-coal mines

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Published: September 26, 2019 1:10:55 AM

However, the revised rates for royalty and dead rents are most likely to remain unchanged when a new one comes following approval of the cabinet committee of economic affairs (CCEA).

Though mining is a state subject, the centre has the power of revision, fixation of royalty and dead rent etc. in respect of major minerals. (Representational image)Though mining is a state subject, the centre has the power of revision, fixation of royalty and dead rent etc. in respect of major minerals. (Representational image)

Just after two days of issuing a gazette notification on revision of royalty rates for non-coal and non-fuel mines, the government has rescinded the same, saying due procedure was not followed while issuing the notification on September 2.

However, the revised rates for royalty and dead rents are most likely to remain unchanged when a new one comes following approval of the cabinet committee of economic affairs (CCEA).

“A mines ministry official had inadvertently issued the notification after getting it approved by the minister. However, as per the procedure, such a notification warrants a CCEA approval. Since that was not in place, rescinding was the only option,” said a source.

A new notification will soon be released after the approval of the CCEA, for which a note has been sent. It will come up for discussion soon, and thereafter, the new notification will be issued. Royalty is generally revised in not less than a gap of three years.

Rates for royalty and dead rents were last revised, mostly upward, in 2014. Since the amendment of the Mines and Minerals (Development and Regulation) Act came into force in 2015, making auction mandatory for allocation of leases, royalty rates in the rescinded notification have been proposed to be levied separately for those leases allotted through the auction route and those allotted prior to the period auction was not mandatory.

As obvious, royalty rates for leases gotten through the auction route have been reduced from the 2014 level. However, there is hardly any difference between the royalty rate proposed in 2019 for old leases and the rates applicable even now since 2014.

Royalty rates, uniformally applicable for all states, are fixed on ad valorem basis for most of the minerals while for others it is fixed on tonnage basis. The mines ministry had earlier formed a 24-member study group, headed by its additional secretary, to review the existing rates and recommend a revision.

Though mining is a state subject, the centre has the power of revision, fixation of royalty and dead rent etc. in respect of major minerals.

As per the notification, the concept of charging of dead rent shall not be applicable in cases of mines which are granted through the auction mechanism. For mines allocated through the other route, Rs 800 per hectare annually will be charged from the fourth year of lease. For the fifth and sixth year, it would go up to Rs 2,000 and in the seventh year of the lease, dead rent will be charged Rs 4,000 per hectare, per annum.

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