Times of India

BANGALORE, Jul 21: Almost all the iron ore mining areas in Bellary and granite quarry operators in Bangalore rural district will come under the proposed tax scanner of the forest department.

The new forest development tax announced in the budget will make the cash-rich mining czars in Bellary and quarry operators in Bangalore rural district to shell out more amount for exploiting resources in the forest region.

Even though the new tax proposal is applicable for other mining districts, mining operators in Bellary alone will end up paying the forest development tax. Reason: 99% of the total 86 mining operations in Bellary are done in forest areas.

The district has three hot spot mining regions -- Hospet, Sandur and Bellary. While Hospet has 11 mining leases, Sandur 57 licences. Bellary has 18 registered mining companies. Two other districts - Tumkur and Chitradurga - won't be taxed as iron ore mining is carried out in revenue lands and not in forest region. According to government records, of the total 117 permits in the state, Tumkur has 18 and Chitradurga 29 mining licences.

According to the Karnataka Forest Act, 1963, any produce belonging to forest region, may it be sand, timber or even a leaf if extracted and traded for business purpose, such commodities come under forest development tax. Successive governments had failed to bring ore and quarry operators under the tax net.

"The forest department has succeeded in impressing this government in bringing quarry and ore under the forest development tax. The money thus earned will be used for the development of forests," sources said.

The forest department is working on the procedures to be adopted while imposing the new tax. Accordingly, the department has arrived at a decision to maintain standard tax structure of 8%, to be levied at the time of billing. The government, at the time of presenting the budget, estimated an additional revenue of Rs 150 crore a year through this tax, but the collection, in reality, is expected to surpass it.

The forest department collects only a permit fee of Rs 33 per tonne of ore extracted from its region, while royalty amounting to nearly Rs 8 crore a year is collected by the mines and geology department. With price of iron ore being Rs 1,200 per tonne, it is estimated by the department that 40 million tonnes of ore are mined in the state, with a major chunk coming from Bellary region.

Besides, the state-owned Mysore Minerals Limited (MML) possesses 6 lease holds to the extent of 486.39 hectares in Bellary producing over 60 lakh tonnes of iron ore. A mining czar maintained that the tag of "illegal mining" on Bellary operators would be to some extent wiped off due to imposition of this tax. "One of the reasons we were termed illegal is due to ore not being included under forest development tax net. With the new system coming into force, there should not be any complaints against our business," he maintained.

The mining, particularly in the Bellary region, had attracted the ire of Kumaraswamy government. A committee headed by senior forest official U B Singh was appointed to look into illegal mining aspects in the forest region. In addition, the JD(S)-BJP government asked the Lok Ayukta to probe the issue, the report of which is expected to be made public shortly.