India: Karnataka passes landmark Mineral Rights and Mineral Bearing Land Taxation Bill

The Karnataka state government has introduced the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024, in response to a landmark Supreme Court ruling that empowers states to levy taxes on mineral rights and mineral-bearing lands. This legislative move aims to establish a comprehensive framework for mineral taxation, including retrospective taxation provisions and differentiated rates based on mining categories.

Differentiated tax rates: Mining leases are categorised into five groups:

Pre-2015 non-auctioned leases, leases to Central/state PSUs granted before 2015 (below and above 50 years), post-2015 PSU leases, auctioned leases after 2015.

Implications for stakeholders

The Bill seeks to address revenue shortfalls and streamline Karnataka's mineral taxation policy. While promoting clarity for mining leaseholders, it underscores compliance and efficient resource monetisation. Notably, Karnataka stands as India's 3rd-largest iron ore-producing state, with volumes at 39.5 mnt in CY'23 with key producers being NMDC, JSW, Vedanta, SMIORE, and the state's own Karnataka State Mineral Corporation.