A team of officials of the departments of steel & mines and forest & environment will soon submit its recommendations on the proposal for levying forest development tax (FDT) on minerals extracted from forest areas.
The team, consisting of 6 members, had recently visited Karnataka to study the modus operandi of the proposed tax which is already in vogue in the iron ore rich southern state.
"It is still very early to say anything about the proposed tax. The modalities have not been worked out yet. The state government team is just back from its visit to Karnataka. The team will be offering its recommendations to the state government”, said a top forest department official.
Though the FDT model has not been decided yet, an earlier note by steel & mines department said, the tax could be imposed on the basis of sale value of the mineral. The IBM (Indian Bureau of Mines) sale value for iron ore, chrome ore and manganese could be taken up for this purpose.
However, for bauxite and many other minerals, the IBM sale value is not available and a mechanism will have to be devised for assessing the same.
The views of the law department may be taken regarding collection of royalty on the forest areas through forest and environment department which is presently being realized through steel & mines department.
The law department is also set to furnish its considered views on whether FDT can be levied by the state forest department on minerals since the same is not permissible for states under Section 2 of Mines and Minerals (Development & Regulation) Act-1957.
Earlier, the steel & mines department had informed the department of forest & environment that it has no objection to the FDT proposal.
As there is the possibility of lessees showing mineral forest produce as extracted from non-forest area, the forest & environment department would work out a mechanism to identify the produce which is from the forest area.
Since 2003, the state government has been collecting FDT on kendu leaf, timber and bamboo.
It may be noted that the Karnataka government, through a notification in 2008, had levied FDT at 12 per cent on firms that undertook mining activities in forest areas. The FDT was opposed by several mining companies which had challenged the tax in the court. However, the notification was upheld by the Karnataka High Court.
The proposal for FDT comes close on the heels of the demand for Mineral Resource Rent Tax (MRRT) made by the state before the Centre. Chief Minister Naveen Patnaik had urged the Government of India to impose MRRT at the rate of 50 per cent on super profit made by miners.
