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    CBDT notifies rules on tax exemption for District Mineral Foundation Trusts

    Synopsis

    The Board has specified conditions for availing the exemption. The Trust cannot engage in any commercial activity and activities and nature of the specified income shall remain unchanged throughout the financial years. The Trust has to file income tax returns and audit reports, certified by a chartered accountant.

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    The Central Board of Direct Taxes has exempted from tax the income of District Mineral Foundation Trusts arising from contribution by leaseholder to the foundation, interest on late payment, penalties, interest on the funds, saving bank accounts and that received from excess funds invested in term deposit.

    The Board has specified conditions for availing the exemption. The Trust cannot engage in any commercial activity and activities and nature of the specified income shall remain unchanged throughout the financial years. The Trust has to file income tax returns and audit reports, certified by a chartered accountant.

    “In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘District Mineral Foundation Trust’ as specified in the schedule to this notification, constituted by Government in exercise of powers conferred under section 9(B) of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 (10 of 2015) as a ‘class of Authority’,” the Board said in a notification issued on September 10.

    The exemption will apply for the assessment years 2018-2019, 2019-2020, 2020-2021, 2021-2022 and 2022-2023.

    The District Mineral Foundation has been created in each district under the provisions of Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015 and falls under the purview of the Ministry of Mines. DMFs are funded by statutory contributions from holders of mining leases.

    Industry bodies have previously sought subsuming all levies like royalty and contributions to the DMF into one tax like goods and services tax to reduce the tax burden on the mining industry. They have argued that the mining sector is going through a tough time due to falling commodity prices and demand contraction.

    Federation of Indian Chambers of Commerce and Industry had previously underlined multiple challenges coupled with disruptions due to coronavirus lockdown, and sought deferment of royalty and contributions to DMF and National Mineral Exploration Trust (NMET) by six months.
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