<p>Bengaluru: Public sector mining giant <a href="https://www.deccanherald.com/tags/nmdc">NMDC</a> Ltd may have to shell out an estimated tax of Rs 13,975 crore to the state government following the enactment of the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024. The Bill, which was passed by the <a href="https://www.deccanherald.com/tags/karnataka">Karnataka</a> legislature in December last year, is awaiting the assent of the President of India.</p>.<p>The Bill, in its present form, proposes retrospective applicability of tax on mineral rights and mineral bearing lands. “Should it be enacted as currently drafted, the Company may be liable to pay tax amounting to approximately Rs 13,975.07 crore. However, considering the pending legislative process, the reservations of the Governor, and the ongoing stakeholder discussions, this amount has been disclosed as a contingent liability in the financial statements,” NMDC said in its latest annual report.</p>.<p>The state government had passed the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024 subsequent to the Supreme Court verdict which stated that states can collect mineral taxes on mineral bearing land with retrospective effect from April 1, 2005.</p>.Karnataka government tables bill to appoint recovery commissioner for illegal mining.<p>To date, the Bill is pending enactment, awaiting the assent of the President of India. Based on the legal opinion obtained by the Company, since, the Governor of Karnataka has referred the Bill for Presidential assent along with reservations on the legality of the said bill, it cannot be treated as law unless and until such assent is received, the company said.</p>.<p>However, in case of the enactment of the new law, the company intends to recover the applicable amount from its customers with whom it has signed long-term agreements.</p>.<p>“As per the terms of the Long-Term Agreements and the Auction Notices, any future imposition of statutory duties, levies, or taxes is contractually recoverable from customers/ bidders. Upon enactment of the Bill, the Company will assess the enforceability of such recourse provisions and take appropriate legal action to recover the applicable amounts from concerned parties,” NMDC said in the annual report.</p>.<p>The company has challenged the levy as being retrospective and in conflict with central mining laws. If upheld, MRT and other additional levies could erode NMDC's margins, Motilal Oswal Financial Services said in its recent analysis on the company.</p>.<p>Under the proposed regime, the total levies in Karnataka (including royalty, DMF, NMET, mining premium, and MRT) would amount to Rs 2,707 per tonne. (about 78 per cent of IBM price) as against Rs 1,822 per tonne (about 52 per cent of IBM price) earlier. Given that about 30 per cent of NMDC’s production comes from Karnataka, the incremental duty of Rs 885 per tonne in the state could drag down NMDC’s overall EBITDA by an estimated Rs 250-300 per tonne, the analyst firm said.</p>
<p>Bengaluru: Public sector mining giant <a href="https://www.deccanherald.com/tags/nmdc">NMDC</a> Ltd may have to shell out an estimated tax of Rs 13,975 crore to the state government following the enactment of the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024. The Bill, which was passed by the <a href="https://www.deccanherald.com/tags/karnataka">Karnataka</a> legislature in December last year, is awaiting the assent of the President of India.</p>.<p>The Bill, in its present form, proposes retrospective applicability of tax on mineral rights and mineral bearing lands. “Should it be enacted as currently drafted, the Company may be liable to pay tax amounting to approximately Rs 13,975.07 crore. However, considering the pending legislative process, the reservations of the Governor, and the ongoing stakeholder discussions, this amount has been disclosed as a contingent liability in the financial statements,” NMDC said in its latest annual report.</p>.<p>The state government had passed the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024 subsequent to the Supreme Court verdict which stated that states can collect mineral taxes on mineral bearing land with retrospective effect from April 1, 2005.</p>.Karnataka government tables bill to appoint recovery commissioner for illegal mining.<p>To date, the Bill is pending enactment, awaiting the assent of the President of India. Based on the legal opinion obtained by the Company, since, the Governor of Karnataka has referred the Bill for Presidential assent along with reservations on the legality of the said bill, it cannot be treated as law unless and until such assent is received, the company said.</p>.<p>However, in case of the enactment of the new law, the company intends to recover the applicable amount from its customers with whom it has signed long-term agreements.</p>.<p>“As per the terms of the Long-Term Agreements and the Auction Notices, any future imposition of statutory duties, levies, or taxes is contractually recoverable from customers/ bidders. Upon enactment of the Bill, the Company will assess the enforceability of such recourse provisions and take appropriate legal action to recover the applicable amounts from concerned parties,” NMDC said in the annual report.</p>.<p>The company has challenged the levy as being retrospective and in conflict with central mining laws. If upheld, MRT and other additional levies could erode NMDC's margins, Motilal Oswal Financial Services said in its recent analysis on the company.</p>.<p>Under the proposed regime, the total levies in Karnataka (including royalty, DMF, NMET, mining premium, and MRT) would amount to Rs 2,707 per tonne. (about 78 per cent of IBM price) as against Rs 1,822 per tonne (about 52 per cent of IBM price) earlier. Given that about 30 per cent of NMDC’s production comes from Karnataka, the incremental duty of Rs 885 per tonne in the state could drag down NMDC’s overall EBITDA by an estimated Rs 250-300 per tonne, the analyst firm said.</p>