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Journalism of Courage
Aimed at boosting the exports of minerals,the income tax department is planning to clarify tax-related issues in the mining sector.
The department will issue a circular clarifying that provision for the tax collection at source (TCS),introduced in the Budget 2012-13,on coal,lignite and iron ore will not be levied on its export.
According to the provision,TCS is collected by seller of the mineral from the buyer at one per cent. The provision is effective July 1,2012. However,exporters of these minerals have raised concern about the provision,arguing that the buyer of these minerals are not Indian residents and hence their income is not taxable in the country.
The fact that importers income is not taxable in the country means that the TCS can not be levied on them. Therefore,we will issue a circular to clarify the issue, a government official said. This will reduce the price of Indian minerals in the global market and help exporters in increasing the exports of minerals.
Exports of iron ore from India,once the worlds third largest supplier,has declined more than 40 per cent in the April-June quarter,especially due to falling global prices and a slowdown in China.
Further,the 30 per cent export duty imposed by the government has added to the decline in exports. According to the ministry of mines,iron ore exports fell to 12.11 million tonnes in the first quarter of the fiscal year. India exported 57.35 million tonnes of iron ore in the last fiscal.
The trading of minerals has remained largely unregulated so far,resulting in non-reporting or under-reporting of trading in minerals.
In order to collect tax at the earliest point of time and also to improve reporting mechanism of transactions in mining sector,it is proposed that tax at the rate of 1 per cent shall be collected by the seller from the buyer, the Budget had said. However,the seller will not collect tax if it is purchased for personal consumption.
