Industry body ASSOCHAM said that government’s proposal to impose 26% tax on profits from coal mining and 100% royalty on other minerals will make the Indian mining and mineral based industry as the most heavily taxed in the world and make it globally uncompetitive.

The group of ministers recently proposed these measures as contribution to the district mineral development fund and suggested their incorporation as amendment to the Mines and Minerals Development and Regulation Act.

The Associated Chambers of Commerce and Industry of India said that instead of 100% royalty contribution, mining companies may be required to make a one time upfront payment of 26% of the market value of land at the time of grant of mining lease.

It said that alternatively, an amount less than 10% of the royalty by a mining lease holder and a matching contribution by the state government may be considered. When these funds are utilized, the percentage of royalty required to be paid may be increased.

The GoM’s royalty proposal will lead to an annual revenue loss of INR 6,000 crore to the government on account of various taxes like income tax, dividend distribution tax, dividend and disinvestment collections.

Besides, the valuation loss of public sector companies like CIL, MOIL, SAIL, MNDC, NALCO and others could be INR 75,000 crore. Similarly, the valuation loss of private companies like HINDALCO, BALCO, SESA GOA, JSW and others is estimated at INR 25,000 crore.