
Center Explores Legal Remedy To Counter Karnataka's Proposed Mineral Levies
This follows concerns from the mining and steel sectors, reported The Economic Times.
A high-level meeting, chaired by Union Heavy Industries Minister HD Kumaraswamy and Law Minister Arjun RAM Meghwal, took place in New Delhi on Thursday.
Officials and industry representatives discussed legislative options to mitigate the potential fallout of Karnataka's tax policy.
In December 2024, the Karnataka Legislature passed the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, which is pending gubernatorial approval. The Bill introduces significant levies on mineral rights, sparking criticism from industry leaders.
Minister Kumaraswamy called the taxes“steep,” arguing that such measures could destabilise India's steel industry and compromise the nation's self-reliance vision under Atma Nirbhar Bharat.
He warned that emulating Karnataka's approach could lead to increased steel imports, threatening India's target of producing 300 million tonnes of steel annually by 2030.
The Bill proposes varying tax rates by mineral type, with levies expected to generate Rs 4,714 crore annually. Critics argue the taxes are three times higher than those in other states, potentially hampering mining operations.
The Supreme Court's August 2024 ruling upheld states' authority to impose taxes on mineral-bearing land, reversing a 1989 decision.
It also allowed retrospective taxation from April 1, 2005, while permitting payment of dues over 12 years starting 2026.
The mining and steel industries fear that Karnataka's taxes could set a precedent, impacting the sector's competitiveness.
Participants in Thursday's meeting highlighted that such measures could derail economic goals, including surging steel demand projected at 280 million tonnes by 2030.
The Centre's legal review underscores the complexity of balancing states' fiscal autonomy with national industrial priorities.
The issue now awaits further deliberations as the Centre seeks to align state-level taxation with broader economic objectives.
(KNN Bureau)
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