Karnataka aims at minting over Rs 10.8k crore from mining

Bengaluru: Faced with challenges in funding the flagship 'guarantee' schemes, the Siddaramaiah administration on Friday approved two measures that could fetch the exchequer at least Rs 10,818 crore from the mining sector. 

The Cabinet approved the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, which will allow the government to levy taxes, with retrospective effect, on mineral rights and owners of mineral-bearing lands. This is estimated to fetch Rs 4,713 crore.

Briefing reporters, Law & Parliamentary Affairs Minister H K Patil explained that this tax will be in addition to the royalty being already levied on the mined minerals.

"At present, only the miner pays the royalty, but the landowner also has to pay the tax now. For one tonne of iron ore mined from a land, a tax of Rs 100 will be levied on the owner of the land," Patil explained, adding that the rate of tax would depend on the mineral.

The decision follows a recent Supreme Court verdict that the states have the legislative right to impose tax on minerals. 

The Cabinet decision is also in line with another ruling of the Supreme Court that allowed the states to collect taxes on mineral-bearing land and mining rights with retrospective effect from April 1, 2005.

The proposed rate of tax will range from Rs 20 to Rs 100 per tonne for different minerals under all categories of mines.

When asked if the move was aimed at collecting additional income for the state government, Patil conceded that they were collecting the money that was due to the government.

In another decision, the government decided to provide a one-time settlement (OTS) option to mining violators, especially those who mined beyond their licensed jurisdiction. The government is eyeing over Rs 6,105 crore of penalties under this. 

"Till now, we didn't know the exact quantum of the violation. Now, we know the extent of the violation through the Differential Global Positioning System (DGPS). Thus we can enforce," Patil said. 

The minister noted that a royalty of Rs 1,221 crore and a penalty of Rs 6,105 crore was expected by the government. 

However, Patil was non-committal when asked if the OTS would entail a discount. "I won’t say whether it is more or less (than what's due) as it will become a benchmark for those people," he said.