Feud traps Rs. 7,000 cr. mining taxes

  • About Rs.7,000 crore of potential mining taxes are locked in litigation over the question of whether rules notified under a 2015 mining law are applicable from the date of their notification or from the day the law came into force.
  • The Mines and Minerals Development and Regulation Act of 2015 came into force on January 12, 2015, but the District Mineral Fund (DMF) rules under the law were notified in September 2015.
  • The DMF norms mandate that miners must pay 10% of royalties on auctioned mines and 30% of royalties for mines allotted before the auction regime began, towards a trust that will finance development projects in mining-affected areas.
  • Miners had paid about Rs.7,000 crore in DMF dues by April 2017, but some mining firms had approached the judiciary on the grounds that the rules didn’t apply for the interim period from January 2015 till the notification of the DMF rules by different States.
  • The matter is now being heard in the Supreme Court after miners got some relief from High Courts about the ‘retrospective applicability’ of DMF rules.
  • If we have their DMF dues (for those who haven’t paid from that date), it would be roughly another Rs.7,000 crore.
  • The significance is that there has been a paradigm shift in mineral-rich areas with DMF trusts being operational in over 287 districts.
  • Jharkhand, for instance, has decided to invest most of its DMF collections in drinking water projects in districts where mines are operational.
  • The idea behind the DMF is to change the way mining is viewed and create a stake in it for the community.

DMF

  • District Mineral Foundation (DMF) is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations. It is funded through the contributions from miners.
  • About a dozen of states including Andhra Pradesh, Odhisa, Gujrat and Jharkhand accounts for all India operating mines.
  • Funds are meant for those effected by excavation.
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