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Cement prices across various states are likely to increase as state governments may impose new mineral taxes after a Supreme Court judgement, according to JM Financial report.
Following the Supreme Court ruling in July 2024, which allowed states to levy taxes on mineral rights and mineral-bearing lands in addition to royalties, Tamil Nadu has introduced the Tamil Nadu Mineral Bearing Land Tax Act, 2024. Under this law, an additional Rs160 per tonne tax on limestone mining will take effect from February 20, 2025. With other mineral-rich states, including Karnataka, considering similar measures, cement companies are expected to raise prices to offset rising costs. The new tax is expected to significantly impact cement manufacturers operating in Tamil Nadu. As limestone is a key raw material in cement production, the additional tax will increase the cost of manufacturing, forcing companies to consider price hikes to maintain profitability. To offset the cost impact, cement prices in Tamil Nadu are expected to rise by Rs8-10 per bag. Over the past few years, cement prices in the state have been under pressure due to intense market competition. However, with this new tax burden, companies may have no choice but to pass on the additional cost to consumers through price increases. Industry experts believe that Tamil Nadu's move may set a precedent for other mineral-rich states to introduce similar taxes. The Karnataka government is already in discussions regarding a potential mineral tax, and other states with significant limestone reserves may follow suit. If more states impose such levies, cement prices across India could witness a broader increase in the coming months. Cement companies are expected to adopt a gradual approach to price hikes to avoid sudden shocks in the market. However, with rising input costs, the industry's pricing strategy will be a key factor to watch in the near future. As the situation unfolds, analysts will closely monitor how cement manufacturers adjust their pricing and how the new tax policy influences the broader construction and real estate sectors in Tamil Nadu and beyond. (ANI)
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