- Leasing of mines with royalty charged by the government is classified under Heading 9973, sub-heading 997337 (licensing services for the right to use minerals, including exploration and evaluation).
- Such services are taxable at 18% GST under the Reverse Charge Mechanism as per Notification No. 13/2017-CT (Rate).
- The service does not fall under Entry 17(iii) of Notification No. 11/2017-Central Tax (Rate), which applies to the transfer of the right to use tangible, pre-existing goods.
- Royalty paid for mining rights is considered a compensatory payment for the right to extract minerals, not a tax.
Source: vilgst.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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