India Faces Retrospective Taxation: Supreme Court Allows States to Collect Mining Dues from 2005

EAC-PM member Shamika Ravi warns of the return of retrospective taxation in India. The Supreme Court has permitted states to collect royalty and tax dues on mining activities dating back to April 2005. The Centre and mining companies could owe arrears amounting to Rs 1.5-2 lakh crore.

On Wednesday, Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi expressed concerns over the revival of retrospective taxation in India, following a Supreme Court decision.

The apex court has authorized states to recover royalty and tax dues on mineral rights and mining activities from April 2005, a move that could see arrears amounting to Rs 1.5-2 lakh crore.

In a majority 8:1 ruling on July 25, the court determined that legislative power to tax mineral rights resides with the states, not Parliament. This decision means arrears must be collected over 12 years, despite opposition from the Centre and concerns about the potential financial impact on PSUs.

(With inputs from agencies.)