Forest Development fee to be levied @ 12% on iron ore in Karnataka e-auctions.
Government of Karnataka has recently made a further amendment in the Karnataka Forest Act 1963. The Act may be called as the Karnataka Forest (Amendment) Act, 2016 and was first published in the Karnataka Gazette on 27 Jul’16.
As per the latest amendment, Forest Development Fee (FDF) at the rate of 12% shall be levied on the disposal of all the minerals produced from forest. It will be levied on sale of all purpose-inside/outside Karnataka or for purpose of export or for captive consumption.
The notification also declares that the levy assessment and collection of Forest Development Tax (FDT) under principal Act as amended by this Act or any rules, notification, order letter or guidelines shall be deemed to have always been levied and collected as Forest Development Fee (FDF).
No FDF on forest produce shall be payable to the state govt. For which no demand was raised during the period from 16 Aug’08 till the commencement of the Karnataka Forest (Amendment) Act 2015 and the state govt. may make rules regarding manner of levy, computation and collection of FDF from retrospective date.
Link to the notification of FDF
How will it impact iron ore prices in Karnataka?
After this notification, FDF has started appearing in the iron ore e-auction sheets as well. Now apart from royalty @ 15% and VAT @ 5.5%, FDF @ 12% will also be levied on the auction prices of iron ore.
Thus this will add to the production cost of pellet and sponge iron manufacturers who participate in the Karnataka e-auctions.
Pellet and sponge iron prices move up in southern India
Post notification of FDF pellet prices in southern India have noticed an increase. Bellary pellet offers for Fe 63% which were hovering at INR 4,200-4,250/MT (basic) last week have now increased to INR 4,300-4,350/MT (basic).
On similar lines, C-DRI prices in Bellary have moved by INR 200-300/MT D-o-D and P-DRI prices have gone up INR 150/MT D-o-D.
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