The government today approved the adoption of ad-valorem regime for charging royalty on coal and lignite at 14% and 6% respectively.
The move will help coal-rich states to generate an additional Rs 1,000 crore in revenues a year, said an official statement.
A study group, constituted by the coal ministry, had proposed that royalty for coal and lignite should be charged on an ad-valorem rate of 14% and 6%, respectively, excluding taxes and other levies.
Currently, the royalty for both the minerals is calculated through a formula consisting of ad-valorem plus a fixed component.
While the fixed component depends on the grade of coal, ad-valorem rate is calculated at basic pit-head price and has been fixed at five% of the invoice price, excluding taxes and other levies.
The proposal to shift to the new regime was approved by the Finance Ministry and the Planning Commission, and will be applicable for both state-owned and private sector miners, including captive coal producers.
Royalty rates for both coal and lignite have not been revised since August, 2007.
Mineral-rich states, including Odisha, Jharkhand, Chhattisgarh, Andhra Pradesh, Tamil Nadu and Madhya Pradesh, have been seeking the shift for long to ad-valorem based royalty regime.
