SC mining tax ruling's impact on Coal India may touch Rs 35,000 crore in worst-case scenario: Chairman

The Supreme Court recently allowed states to recover royalty on mineral rights and mineral-bearing lands from mining companies

If the Supreme Court’s review of the mining taxes yields no favourable result or if Coal India fails to recover the taxes from its customers, the company's financial impact may run into Rs 35,000 crore, a top Coal India official said on August 23.

"Two subsidiary companies – Mahanadi Coalfields Ltd and Central Coalfields Ltd – are being affected, while the rest of the subsidiaries remain unaffected. Mahanadi Coalfields in Odisha is the most impacted. In the worst-case scenario, our impact could be about Rs 35,000 crore, if we are unable to recover from long-term fuel supply agreements (FSAs) customers," Coal India Chairman PM Prasad said.

At the moment, Coal India is awaiting final clarity before considering any "provisioning" in its accounts.

Talking to reporters on the sidelines of a Bharat Chamber of Commerce interaction, Prasad said Central Coalfields in Jharkhand will be affected by about Rs 350 crore. "However, we expect to recover a minimum of 75-80 percent of the amount, as they are large state-owned power generation companies having FSAs. Then our final net impact may be Rs 6500-7000 crore," he said.

The Supreme Court recently allowed states to recover royalty on mineral rights and mineral-bearing lands from the Centre and mining companies since April 2005.

Prasad said that the matter is sub-judice and a three-member bench of the Supreme Court is expected to review the ruling.

According to the current ruling, the tax demand will be staggered in instalments over a 12-year period starting April 1, 2026.

(With PTI inputs)