Nuvama flagged risks from a proposed Karnataka government bill to levy taxes on iron ore and other minerals, a move that could have far-reaching implications for miners and consumers alike. Following an August 2024 Supreme Court ruling allowing states to collect mineral taxes retrospectively, the Karnataka government plans to impose a ₹100/t tax on iron ore starting April 1, 2005, and a tax on mineral rights ranging from ₹1/t to three times the royalty rate starting January 12, 2015.
The brokerage noted that if the bill is passed, Vedanta and NMDC will bear the brunt of the tax in Karnataka, while JSW Steel could face indirect costs if NMDC opts for recovery. Nuvama also cautioned that other states might follow Karnataka’s lead, potentially impacting all steel producers in the country. This development poses significant downside risks to the sector’s profitability.
