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State may impose 15% forest tax

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Taking a cue from the Karnataka government, Odisha plans to levy (FDT) on minerals on minerals extracted from forest areas. The tax rate is likely to be in the range of 10-15 per cent on sale value of the mineral.

For imposition of FDT, the state government will effect an amendment in the (OFA) and FDT Act.

"Presently, FDT is levied on three items- timber, bamboo and kendu leaves. We have to amend the OFA and FDT Acts to impose this tax on minerals extracted on forest land. We will consult the law department for their views. Today, there were preliminary discussions on the issue and modalities for roll out of FDT have not been decided yet”, said B P Singh, special secretary (forest).

Chief Secretary said, “FDT is currently being levied on some forest products. We are thinking of imposing the tax on minerals. The State Cabinet will take a final view on the matter.”

It may be noted that a team of officials of the departments of steel & mines and forest & environment had recently visited Karnataka to study the modus operandi of the proposed tax which is already in vogue in the iron ore rich southern state.

"The team has submitted its recommendations and is currently under our scrutiny”, Singh said.

An earlier note by steel & mines department said the tax could be imposed on the basis of sale value of the mineral.

The (Indian Bureau of Mines) sale value is available for iron ore, chrome ore and manganese which could be the sale value for calculation of tax.

However, for bauxite and many other minerals, the same is not available and a mechanism will have to be devised for assessing the sale value.

The law department is set to furnish its considered views on whether FDT can be levied by the state forest department on minerals since the same is not permissible for states under Section 2 of Mines and Minerals (Development & Regulation) Act-1957.

Earlier, the steel & mines department had informed the department of forest & environment that it has no objection to the FDT proposal.

As there is the possibility of lessees showing mineral forest produce as extracted from non-forest area, the forest department would work out a mechanism to identify the produce which is from the forest area.

Since 2003, the state government has been collecting FDT on kendu leaves, timber and bamboo.

It may be noted that the Karnataka government, through a notification in 2008, had levied FDT at 12 per cent on firms that undertook mining activities in forest areas. The FDT was opposed by several mining companies which had challenged the imposition of such a tax. However, the notification was upheld by the Karnataka High Court.

The proposal for FDT by the Odisha government comes close on the heels of the demand for Mineral Resource Rent Tax (MRRT) made by the state to the Centre.

Chief Minister Naveen Patnaik had urged the Government of India to impose MRRT at the rate of 50 per cent on windfall gains made by miners.

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