NEW DELHI: In order to boost the ailing mining sector, the Central government is considering a proposal to cap the total tax rate on companies in the space at 40 per cent. Currently, effective taxation on the sector stands at higher than 50 per cent. After a meeting with the industry representatives on Thursday, the Prime Minister’s Office (PMO) directed the Union finance ministry to look into the taxation issues plaguing the sector. According to the industry, high taxes have been making the business “not very lucrative” for miners.
“The representatives of the mining industry had met PMO to discuss their sector-specific problems. Taxation was one major concern flagged by them. At present, the total tax on mining comes closer to 65 per cent, which is not conducive for the sector. The (finance) ministry has been asked to look into it. The proposal is to cap it at 40 per cent, which is under consideration,” a senior official from the Finance Ministry told this publication.
While the budget had many sops for the infrastructure sector in general, it was without any significant takeaways for the metals and mining industry. “The government is serious about the reforms in the mining sector and is considering the key demands of the sector,” the official added.
One of these demands is the extension of mining leases, where the government companies are allowed extensions for 20 years at a time beyond the stipulated period of 50 years, but private companies are not.
Private players, however, are seeking extensions for all private sector mining leases till March 31, 2020 and thereafter, extending this for a further 20-year period.
These changes would give a fresh lease of life to about 329 mines in 10 states that were facing closure by March next year under current regulations. Another high-level meeting was organised on Friday to discuss the sector’s issues, and Goa’s miners, in particular, headed by Home Minister Amit Shah and attended by Goa Chief Minister Pramod Sawant, and Union Minister of Mines Prahlad Joshi. The mining industry in Goa came to a standstill in March 2018 after the Supreme Court quashed the renewal of 88 iron ore mining leases.