Bhubaneswar, May 24: Odisha government is contemplating bringing minerals within the purview of the Forest Development Tax Act, 2003, to augment revenue and ensure peripheral development in the forest-clad mining areas.

So far, the state has been levying tax under the Act only on forest produce such as timber, bamboo and kendu leaves. Sources said that the state government’s move to bring minerals in the forest development tax net was inspired by the Karnataka model where a similar cess was levied on ores of different kinds extracted from the mines located in the forest areas. Karnataka charges these minerals at 12 per cent of their value.

Significantly, the move follows chief minister Naveen Patnaik’s sustained campaign for the imposition of Mineral Resource Rent Tax in mineral bearing states such as Odisha. The chief minister has written several letters to the Centre demanding that such a tax be levied at the rate of 50 per cent on the profits made by miners. The issue is still under the consideration of the Centre.

In 2005, the Naveen Patnaik government had enacted the Orissa Rural Infrastructure and Socio Economic Development Act to levy a mining cess on all mineral bearing land at a rate not exceeding 20 per cent of the annual value of such land. This law, was, however, struck down by the Odisha courts following which the government went in appeal to the Supreme Court, where the matter is still pending.

Sources said that an official team had already visited Karnataka to study their tax structure and modalities. The team has submitted its report, which is under examination.

“We are contemplating to amend laws to include minerals under this tax net. Other states have already imposed this tax,” said chief secretary Bijay Kumar Patnaik.

Sources said things would start moving once the matter was placed before the cabinet for approval.

Special secretary of state forest department Bhanu Pratap Singh made an impassioned argument in favour of the proposed tax saying that minerals were part of the forest wealth and should be treated as such.

“Since minerals are forest produce, we are thinking of putting up a legal framework to levy the forest development tax on them. We will need to amend the law for the purpose,” he said.

While steel and mines department has already given its green signal to the new move, sources said that the government would consult the law department before taking a final call on the issue which assumed special significance in the context of Odisha’s growing anxiety to generate more revenue from its mineral resources.

The state government has urged the Indian Bureau of Mines for proper valuation of its minerals to ensure that it does not lose revenue in terms of royalty.

The government is also keen on constant monitoring of the valuation process though the bureau invariably has a major say in such matters.