Govt forms panel to study revision of royalty rates on coal

The government has constituted a panel to consider revision of rates of royalty of coal which is at the present 14 per cent ad-valorem on price of the fossil fuel.
In order to consider the question of revision of rates of royalty of coal, "a Study Group...Is hereby constituted," according to an official memorandum.
Ad valorem means according to worth. The term ad valorem can apply to any tax, fee, or duty that is charged as a percentage of the value of products, services, or property.
The nine-member panel under the Chairmanship of Additional Secretary Coal will submit its report to the Coal Ministry within six months. The panel has members from the ministries like mines and power.

The panel will examine whether the present rate of royalty on coal should be revised keeping in view the impact, if any, of such rates on consumers of coal.
It would also study as to what should be the percentage hike or otherwise in the rates of royalty on coal from the present 14 per cent ad-valorem on price of coal.

The government had in April 2012 approved the adoption of ad-valorem regime for charging royalty on coal and lignite at 14 per cent and six per cent, respectively.
The development helped the coal-rich states to generate an additional Rs 1,000 crore in revenues a year.

The rates of royalty on coal and lignite were also revised in August, 2007 on a hybrid formula, based on the recommendation of Committees -- Economic Advisory Council to Prime Minister (EAC) -- and the committee on royalty set up by the Ministry of Coal.