April 12, 2012. The government approved the adoption of ad valorem regime for charging royalty on coal and lignite at 14 per cent and six per cent respectively. The move will help coal-rich states to generate an additional '1,000 crore in revenues a year. Royalty for coal and lignite should be charged on an ad valorem rate of 14 per cent and 6 per cent, respectively, excluding taxes and other levies. Currently, the royalty for both the minerals is calculated through a formula consisting of ad valorem plus a fixed component. While the fixed component depends on the grade of coal, ad valorem rate is calculated at basic pit-head price and has been fixed at five per cent of the invoice price, excluding taxes and other levies.