The government of the southern Indian mineral-rich state of Karnataka has proposed legislation that will impose retrospective tax on mineral land and mineral rights, with the retrospective tax staggered over 12 years, starting from April 2026, government officials said on Monday, December 23.
The Karnataka Mineral Tax Bill 2024 comes after a recent Indian Supreme Court order had allowed state governments to impose taxes on minerals.
The nine-judge Constitution bench had on July 25 ruled that states have the power to impose taxes such as cess on land from which the minerals are extracted, as well as on the minerals.
The tax on mineral rights granted via the route of non-auction of mines will attract three-times the royalties.
Government mining companies which were granted leases before 2015 and for 50 years shall also have to pay three-times the current royalty as tax, according to the proposed legislations.
Government companies that were granted rights before 2015 for a 50-year period and have completed the leases on mines shall have to pay 1.5 times the royalty as tax.
Government companies granted leases after January 2015 will also attract 1.5-fold tax on royalty paid.
Tax on mineral rights granted through the auction route will be INR 1 per mt, the bill has proposed.
Vedanta and Sandur Manganese are the main iron ore producers in Karnataka, while for government-run NMDC Limited iron ore output from mines in the state accounts for 35 percent of its total annual production.
JSW Steel could face some implications from this measure, as it sources sizeable quantities of iron ore from NMDC.