On 14 August 2024, the Supreme Court of India issued a ruling allowing states to impose taxation and royalties on minerals separately from government duties. The ruling also allows states to recover historic duties, which may lead to substantial financial obligations for major industries such as cement, steel, and coal.
The ruling decreed that royalties paid to states are not considered taxes under the Mines and Minerals (Development and Regulation) Act of 1957. This means that relevant companies will have to account for these payments, which may negatively impact their financial performance.
Mineral-rich states will benefit from the potentially huge revenues incurred as a result of these royalties. However, the ruling has sparked some controversy due to its retroactive implementation.
It is expected that the new legislation will impact cement firms with mining operations in India, such as UltraTech Cement, Ambuja Cements, and HeidelbergCement India.
Further complicating the industry’s challenges, on 2 August, the Jharkhand assembly passed a new tax of INR100/t (US$1.19/t) on coal and iron ore, as well as other rates for a range of raw materials.
