Tamil Nadu to net about ₹3,450 crore through Mineral Bearing Land Tax law

Tamil Nadu to generate ₹3,450 crore revenue through Mineral Bearing Land Tax Act, following Supreme Court's judgment.

Tamil Nadu is expected to net about ₹3,450 crore during 2025-26 through the recently-notified Mineral Bearing Land Tax Act, which has been enacted following the Supreme Court’s judgment last year enabling States to levy tax on mines and minerals.

In the current year, the State government’s revenue through non-ferrous mining and metallurgical  industries is likely to be around ₹1,545 crore. This has been projected to go up to ₹4,980 crore.  These figures have been given in the latest budget document, tabled in the Assembly last week.

In the light of the Supreme Court’s verdict last year, the government has framed the  Mineral Bearing Land Tax Act, which received the assent of Governor R.N. Ravi on February 20, 2025.  In the schedules of the law, the government has fixed the rates for two categories of minerals, one for major and another for minor, in addition to mineral oil - crude oil and natural gas. 

For example, in the case of lignite, ₹250 has been prescribed for every tonne. The highest rate in the category of major minerals is ₹7,000 per tonne for sillimanite.  As for the minor minerals, the rate ranges from ₹40 per tonne for clay to ₹420 per tonne for black granite.  In respect of oil, the rates are ₹8,500 per tonne for crude oil and ₹3.5 per cubic metre for natural gas. However, sections of  cement manufacturers have expressed reservations over the levy of the tax as they contend that this will push up the cost, which they will have to pass on to customers. 

The Supreme Court, in its judgment in July last year,  concluded  that the Mines and Minerals (Development and Regulation) Act of 1957 [a Central Act] did not take away the power of State legislatures to tax mining lands and quarries. It also clarified that royalty paid to States for mines on lease was not tax.