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Supreme Court Upholds States’ Power to Tax Minerals
Context
In a landmark judgment, the Supreme Court of India has upheld the rights of state governments to levy taxes on land bearing minerals, resolving a longstanding jurisdictional conflict between the Union government and states. This decision has significant implications for the mining sector and federal relations in India.
Key Points Made by the Supreme Court:
- States Can Tax Minerals: The Supreme Court ruled that states have the right to tax minerals. This is particularly beneficial for states rich in minerals, as it allows them to earn more revenue.
- Difference Between Royalty and Tax: The court explained that royalty (money paid for extracting minerals) is not the same as a tax. A tax is collected by the government for public use, while royalty is like rent for using the minerals.
- No Legal Barrier: The court clarified that there is no law preventing states from taxing mineral rights.
Why does this Decision matter?
- Benefits Mineral-Rich States: States like Jharkhand and Chhattisgarh, which have many minerals, can now earn more money. This is especially important for poorer states.
- Fairness: Different states have different resources. Coastal states benefit from the sea, and hilly states earn from tourism. Allowing states to tax minerals makes things fairer.
- Additional Revenue: States have limited ways to collect taxes. This decision gives them another way to generate income.
Concerns:
- Imbalance Between States: States without minerals might feel disadvantaged. The central government could find other ways to support these states to maintain fairness.
- Impact on Mining Companies: Mining companies are worried they will have to pay more money due to the new taxes.
States should be careful not to charge too much tax. Overcharging could harm the mining business.
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Fact Box: Royalties
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