Economy

CCEA approves ad-valorem royalty for coal, lignite

Vishwanath Kulkarni New Delhi | Updated on April 12, 2012

A file photo of a coal mining site. Coal will now attract a royalty of 14 per cent and lignite will be charged at 6 per cent.

Coal and lignite will cost more as the Cabinet Committee on Economic Affairs (CCEA) has approved a proposal to charge royalty on ad-valorem basis or based on the market value of the mineral.

Coal will now attract a royalty of 14 per cent and lignite will be charged at 6 per cent. As a result of the royalty revision, the coal-bearing states will earn additional revenue of around Rs 1,050 crore over the present earnings of Rs 5,950 crore.

At present, the royalty for both minerals is calculated through a formula consisting of ad-valorem and a fixed component. The fixed component depends on the grade of coal, while the ad-valorem is calculated at basic pit-head price.

The proposed royalty revision is not to be extended to West Bengal, unless the cesses imposed by the State Government are withdrawn.

For states other than West Bengal that levy cesses or other taxes specific to coal-bearing lands, the revision of royalty allowed shall be adjusted for the local cesses or such taxes to limit the overall revenue to the ad-valorem royalty yield, a statement said.

Published on April 12, 2012

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