BENGALURU | March 10, 2016: The mines department has sought stamp duty exemption for companies bidding for mining pits in the state. If implemented, this move, which aims to attract mining companies, could cause a loss of Rs 2,500 crore to the exchequer.
Seeking to replicate the Chhattisgarh model, which was modelled on the ones in Madhya Pradesh and Odisha, the mines department plans to move an amendment to the Stamps Act for this purpose. The revenue department, however, has opposed the proposal saying it's not feasible.
Chhattisgarh brought in the amendment as the earlier model of stamp duty payment had led to non-execution of lease deeds since the amount payable was 100 times more than anticipated by the lessees and had virtually stranded mining operations in the state. However, the stamps and registration department here has decided to oppose the move as it would lead to losses.
The proposal to exempt the mining industry from paying stamps duty stems from the newly implemented Mines and Minerals (Development and Regulation) Amendment Act, 2015. Prior to this, stamp duty was collected on the basis of royalty after the mines were auctioned. Under the new Act, the stamp duty will be collected on auction value of the mines.
In Chhattisgarh, the new Act created havoc with companies who had successfully bid for coal mines refusing to pick up their stakes citing huge rise in stamp duty. Major companies backed out and pressured the Chhattisgarh government to either relax or reduce stamp duty. Anticipating a similar situation, once the mining leases are auctioned for major minerals like iron ore, the mines department mooted the proposal to relax the stamp fee. It is said that many companies are lobbying for the amendment.
Chief minister Siddaramaiah, who will present the budget in March, is yet to take a final call. He had reportedly rejected the proposal once and asked the mines department to rework and place it before the cabinet again.
(Source: http://timesofindia.indiatimes.com/)