India’s government announced on Friday that inconsistent taxes on mineral rights and mineral-bearing lands contribute to higher domestic costs and create a fragmented national market. This statement came just a day after the government passed a bill aimed at limiting new state taxes on mining, amidst ongoing protests.
Opposition parties have expressed concern that these restrictions could negatively impact the finances of mineral-rich states.
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The federal government highlighted that excessive and inconsistent state taxes hinder the competitiveness of domestic minerals and promote unnecessary imports. On Thursday, India’s parliament approved the Mines and Minerals (Development and Regulation) Amendment Bill, which sets boundaries on how state governments can impose new taxes, cesses, or levies on mineral rights and lands unless specifically authorized by the federal government.
Following the passage of the bill, Hemant Soren, the chief minister of Jharkhand, reached out to Prime Minister Narendra Modi, urging him to reconsider the legislation. Soren pointed out in a letter that mining revenue makes up 84.9% of Jharkhand’s non-tax revenue for the fiscal year 2024-25. He warned that significant restrictions on this revenue could severely hinder the state’s ability to fund development, welfare, and social security programs.
The federal government clarified that the new bill would not infringe upon states’ rights regarding land, minerals, or mineral taxes, emphasizing that states would still receive about 90% of all mining-related taxes and payments.
