New Delhi: The Government has imposed an 8% ad valorem duty on the export of iron ore fines, a move expected to give respite to the mining industry, which is reeling under the pressure of lower demand and fall in prices.
“In the notification, for the words and figures Rs200 per tonne, the figures and words 8% advalorem shall be substituted,” the Finance Ministry said in a release.
Under the new arrangement, an exporter’s tax liability will depend on international prices, instead of the quantity sold in volume terms.
On 31 October, the government had announced a fixed levy of Rs200 per tonne on export of iron ore fines, while it had retained the 15% tax on iron ore lumps.
According to the notification, the central government, on being satisfied that it is necessary in the public interest, makes the following amendment in the notification dated 31 October.
The government’s decision to levy a fixed charge on the shipment of a tonne of iron ore fines had met with widespread protests from the mining lobby, which had said that the tax would virtually lead to the closure of many small business houses trading in low grade ore.
Commenting on the Government’s move, Federation of Indian Minerals Industries Secretary General R K Sharma said: “This is a short-term move. The Government needs to have a vision and go for a long-term solution.”
Sharma added that the mineral—rich countries like Australia and Brazil do not levy export tax on raw material.
Earlier, in June policy makers had levied 15% tax on iron ore exports to increase its domestic availability and ease rising input cost pressure on steel producers.
At present, iron ore prices have slipped to about $70 a tonne from $150-200 a tonne in March-April, amid the global economic slowdown.