As the mining sector of the State is in a limbo, the Government has given a second thought to imposition of forest development tax (FDT) on minerals extracted from forest areas.
The Government has reportedly directed the Steel and Mines department and the Forest and Environment department to have a larger consultation with all the stakeholders before taking a decision on the issue.
Chief Secretary JK Mohapatra is stated have advised the two departments to take a considered view on the issue after analysing all aspects confronting the sector.
The proposal of the Forest and Environment department to the Government for levying FDT is pending for more than two years.
The Government does not seem to be in a hurry to impose such a tax as several of its decisions were successfully challenged in the court of law.
Taking a cue from the Karnataka Government, the State Government had decided to levy FDT on minerals extracted from forest areas. The Forest and Environment department proposed to levy tax rate of 15 per cent on sale value of the mineral. While supporting the Forest department proposal, the Steel and Mines department had stated that FDT can be levied on the basis of the sale value of minerals fixed by the Indian Bureau of Mines.
Though IBM sale value for iron, chrome and manganese is available, the same for bauxite and many other minerals is not available and a mechanism will have to be devised for assessing the sale value, the department had advised.
Official sources said the State Government has to amend the Odisha Forest Act (OFA) and FDT Act for imposition of the new tax. Currently, FDT is levied on three items - timber, bamboo and kendu leaves.
Industries sources said levy of FDT on minerals is not permissible under Section 2 of Mines and Minerals (Development and Regulation) Act-1957.
The proposal for FDT by the State Government came close on the heels of a Cabinet resolution for levying mineral resources rent tax on iron ore at 50 per cent of the surplus rent. The decision was rejected by the Centre. The State Government received a jolt in July when the Orissa High Court granted interim stay on the operation of the amended Stamp Duty Act.
Earlier, the High Court had struck down the the Orissa Rural Infrastructure and Socio-Economic Development (ORISED) Act, 2004 for collection of revenue from the mine owners operating in the State.