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Metals & Mining
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Mining Bill – Taxing times
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The empowered Group of Ministers (GoM) under the leadership of Finance Minister have come out with a bill on 7th July 2011 for recovering “mining tax” from the various companies. Though the fine print is still not available, it is likely to face further debate. However if it becomes an act would have impact on the EPS mining companies anywhere between 2% to 20%.
Background
The Mines and Minerals Development Regulation (MMDR) Act 2010 has long been a subject of debate under the premise that mining companies are making “large profits” and invariably at the cost of adjoining sites with no proper benefit being passed on to the project affected people”.
The mining companies were also being accused of not safeguarding the “environment” causing pollution and damage to the flora and fauna close to the sites.
The Minister of Mines during June 2010 proposed that 26% of the “equity” or “profits” of the mining operations of a company should go to the people directly affected by the mining operations. This came as a revolutionary proposal and was opposed by Corporates through industry bodies like FICCI (Federation of Indian Chambers of Commerce & Industry), FIMI (Federation of Indian Mineral Industry). During the last year the Group of Ministers entrusted with this task have had several discussions and have now come up with a bill seeking 26% of profits to be paid by coal companies and an amount equivalent to royalty being paid by other mining companies.
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