Karnataka tables Bill to tax mines and mining land, expects to generate Rs 4,700 crore

Following the recent Supreme Court order that allowed state governments to levy taxes on minerals, the Karnataka Government tabled the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill 2024 in the Assembly on Monday.

As per the Bill, different rates of taxes can be levied by the state government based on the category of the mines “considering the present additional payment paid by the lessee”. However, a uniform rate of tax is proposed for the mining leases which are falling under the same category, it said.

After the Bill was cleared by the cabinet earlier this month, the Government estimated an additional revenue of more than Rs 4,700 crore.

“…the Hon’ble Supreme Court of India on 14.08.2024 has ruled that states can collect mineral 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. The mining leaseholders are allowed to pay the said tax instalments over 12 years, starting from 01.04.2026,” the Bill read.

On the basis of the method of the grant and payment of additional amounts, mining leases in Karnataka are divided into five broad categories—those granted through the non-auction route before 2015, those granted to central or state public sector units before 2015 that have not completed 50 years, those granted to central or state PSUs before 2015 that have completed 50 years, those granted to central or state PSUs after 2015, and those auctioned after 2015.

The clauses introduced in the Bill piloted by the Department of Mines and Geology empowers the Government to make rules regarding the rate of tax to be paid retrospectively from April 1, 2005, for mineral-bearing land and from January 12, 2015, with respect to mineral rights. The Government can also make rules regarding the methodology for determining the taxes, while providing mining companies with avenues for appeal.

As per the Bill, tax payable shall be paid by the lease holder during the dispatch of minerals. If the taxes are not paid at the time, the Government can levy a simple interest of 12 per cent until they are paid.

Of the revenue estimated by the Government, Rs 4,207.95 crore will be generated through mineral rights tax, Law Minister H K Patil said after the cabinet cleared the Bill in the first week of December. An extra Rs 505.9 crore will be raised by levying taxes for mineral-bearing land.

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