Question

Write the meaning of 'recoupment of shortworking'under royalty account in simpls word

Answer 1

❤️Recoupment of Short-working: Usually, in a royalty agreement, a further provision is included about the recoupment of short-working, i.e., the lessor allows the lessee the right to carry forward and set off the short-working against the excess or surplus of royalties over the Minimum Rent in the subsequent years.❤️

Answer 2

In this question, we need to explain the concept of  short working.

• A royalty is a payment made to the owner for the use of their assets.
• For example for the use of the mine the one who is taking the asset need to pay  some rent to the holder.
• That is known as minimum rent which need to be paid to the holder of the asset and if someone is unbale to pay that minimum rent then there is short working.
• Short working recoupment means that short working which is done can be paid to the holder if in some year the holder is getting rent above minimum rent specified by the owner.
• Recoupment of short workings is when the lessee is given an opportunity to recover any excess payment that he may have paid to the lessor as long as he has provided minimum rent in the previous years.

PROJECT CODE #SPJ3