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The Finance Bill 2026 proposes to extend tax deductions for prospecting and exploration expenses by adding critical minerals to Schedule XII of the Income-tax Act, 2025. Section 51 currently allows Indian companies and resident taxpayers to claim deferred deductions over ten years for specified minerals.

The amendment includes lithium, graphite, potash, and several other critical minerals, enabling deductions for expenses incurred in their prospecting and exploration. This measure aims to promote investment in mineral exploration and strengthen supply chains for energy transition technologies. The amendment will take effect from April 1, 2026, applying to the tax year 2026-27 and subsequent years.