Jharkhand’s new mining tax set to drive up mineral prices across India

The eastern Indian state of Jharkhand has taken a significant step toward imposing new taxes on mineral production, a move poised to increase the prices of key resources such as coal to bauxite. According to sources familiar with the matter, the state assembly has passed the Jharkhand Mineral Bearing Land Cess Bill, which now awaits the governor's assent before becoming law.

Once enacted, the bill will impose a tax of INR 100 ($1.19) per tonne on coal and iron ore production. Jharkhand, a key player in the Indian mineral industry, is one of the nation's leading coal-producing states and rich in iron ore, bauxite, and manganese reserves.

This legislative move follows a recent Supreme Court of India ruling that granted Indian states the authority to impose additional levies on mining activities, supplementing the existing royalties. The bill also includes provisions for local governments to recover any outstanding payments starting in April 2026.

In response to this matter, the public relations department of Jharkhand has yet to respond.

B.K. Bhatia, Additional Secretary General at the Federation of Indian Mineral Industries (FIMI), said, "India's mining industry is already saddled with very high taxation, and any new taxes could burden the industry and risk investments."

"The court ruling has given unbridled powers to states, and with such large expenses looming, companies will be looking to prioritize arrear payments instead of making new investments."

The Federation of Indian Mineral Industries (FIMI), an industry lobby group, has estimated that historic arrears for miners in states such as Odisha, Jharkhand, and Karnataka could reach as much as INR 2 trillion. However, it is crucial to note that official figures are yet to be released by the states, underscoring the importance of accurate data in the mining industry.

In Jharkhand, a new tax regime will see miners paying INR 70 per tonne of bauxite and INR 50 per tonne for limestone and manganese. Miners will be required to pay an amount equivalent to 50 per tonne of the royalty imposed by the state government for other minerals.