Karnataka Introduces Bill to Tax Mines and Mining Land

In response to a recent Supreme Court ruling allowing state governments to impose taxes on minerals, the Karnataka government presented the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill 2024 in the Assembly. This move is expected to generate over Rs 47 billion in additional revenue. Under the proposed legislation, tax will be payable by mining leaseholders at the time of dispatching minerals, with different tax rates applied based on the mine’s category. A uniform tax rate is suggested for mining leases within the same category, taking into account the current additional payments made by lessees. The Bill, which was cleared by the state cabinet earlier this month, comes after the Supreme Court’s August 2024 order permitting states to collect taxes on mineral-bearing land and mineral rights with retrospective effect from April 1, 2005. The ruling also waived interest and penalties on past dues before July 25, 2024. Leaseholders will be allowed to pay the taxes in installments over 12 years, starting from April 1, 2026. The Bill categorises mining leases into five groups based on the method of grant and additional payment conditions. These categories include leases granted through non-auction routes before 2015, those granted to public sector units before and after 2015, and those auctioned after 2015. The Bill also empowers the state government to set tax rates for mineral-bearing land and mineral rights, with retrospective implementation from 2005 and 2015, respectively. It includes provisions for mining companies to appeal tax determinations. According to the law, taxes will be paid by the leaseholder at the time of mineral dispatch, with a 12% simple interest charged on overdue payments. Of the total estimated revenue, Rs 42.07 billion is expected from mineral rights tax, and Rs 5.05 billion will be raised from taxes on mineral-bearing land. (Indian Express)