Karnataka govt proposes to tax mining land & leases with retrospective effect

Bengaluru: Karnataka government is planning to impose retrospective taxation on mineral land and mineral rights under the proposed Mineral Tax Bill 2024. If the proposal is passed, then such retrospective tax will create significant liabilities for steel players like NMDC, Vedanta & JSW Steel. As part of the tax on mineral rights, different rates have been proposed, which will be effective from January 2015. Reportedly, tax on mineral rights granted via non-auction of mine route will attract three-times the royalty.

For PSUs who have been granted lease before 2015 and for 50 years will also have to pay three-times the current royalty as tax. PSUs that were granted rights before 2015 for a 50- year period and have completed the lease on mine shall have to pay 1.5 times the royalty as tax. For PSUs, which have been granted lease after 2015 will also attract 1.5 times tax on royalty paid. Tax on mineral rights granted through the auction route will be Re 1 per tonne, the bill has proposed.

The Karnataka government has set a target to garner an additional revenue of Rs 4,200 crore through mineral rights tax, along with Rs 506 crore from taxes on mineral-bearing land. The new Bill follows a landmark ruling by a nine-member constitutional bench of the Supreme Court in July, which clarified that state governments have the authority to tax minerals and mineral-bearing land in their territory.