Parliament Clears Mining Tax Overhaul: Why Mineral-Rich States Are Opposing the New Law
India’s parliament has cleared a major overhaul of the country’s mining taxation framework, increasing federal oversight on mineral levies and triggering significant opposition from several state governments concerned about their fiscal autonomy.
What Happened
Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which is currently awaiting presidential assent. The legislation bars state governments from enacting fresh taxes, cesses, or levies on mineral rights and mineral-bearing lands without explicit authorisation from the central government. Additionally, the amendment features a retrospective clause that could nullify certain state-imposed levies that were previously notified but remain uncollected or undeposited.
This legislative move follows a 2024 Supreme Court ruling that had upheld states’ powers to tax mineral rights and clarified that royalties do not constitute a tax. That judicial decision had enabled states to pursue substantial retrospective claims, which the new amendment seeks to curtail.
Key Highlights
- Federal Restrictions on State Taxes: States are prohibited from levying new cesses, taxes, or charges on mineral-bearing land and mineral rights without prior clearance from the Centre.
- Retrospective Impact: The law includes provisions that could invalidate earlier state levies that have not yet been deposited or collected.
- Centre’s Stance on Revenues: Mines Minister G Kishan Reddy stated in parliament that the revenue share of states in mineral earnings increased to around 85 per cent compared to 65 per cent in 2014–15, arguing that the reform will not reduce their overall earnings.
- Jurisdiction Division: The Centre continues to regulate major minerals such as copper, iron ore, coal, and limestone, while states retain authority over minor minerals.
- Pushback from States: Mining-heavy states including Odisha, Jharkhand, and Chhattisgarh have expressed concern over shrinking fiscal autonomy. Odisha faces potential exposure to over Rs 1 lakh crore in disputed claims, while Jharkhand’s chief minister labelled the legislation a “black law” and warned of demonstrations. Kerala is exploring legal remedies, citing encroachment on state powers over land and revenue.
- Industry Reaction: Industry bodies have largely supported the reform, noting that a unified system reduces litigation risk and compliance complexity.
Why This Matters
The central government maintains that a uniform national taxation structure is vital to eliminate regulatory ambiguity and boost investor confidence across key industrial supply chains, including steel, power, and infrastructure. By establishing standardisation, the Centre aims to increase domestic output of essential raw materials.
Conversely, affected states argue that the reform undermines their constitutional taxing powers and deprives them of anticipated revenues. The divergence between national standardisation goals and regional fiscal rights has renewed debate over federal resource governance.
What to Watch Next
The bill is awaiting formal presidential assent to become law. Following that, mineral-rich states and other opposing administrations may pursue legal challenges in court. Opposition leaders in affected regions have also indicated potential public protests if the legislation remains in place.
Frequently Asked Questions
What is the Mines and Minerals Amendment Bill, 2026?
It is legislation passed by parliament to standardise mining taxation by prohibiting states from imposing new levies or cesses on mineral rights and mineral-bearing land without central government approval.
How does the bill affect pending state revenue claims?
The bill contains a retrospective provision that could invalidate state-notified levies that have not yet been collected or deposited.
Why are states like Odisha, Jharkhand, and Kerala opposing the legislation?
States are concerned about the erosion of their independent taxing authority and fiscal space. Odisha faces exposure to over Rs 1 lakh crore in disputed claims, Jharkhand’s leadership has protested the measure, and Kerala is exploring legal challenges regarding state powers over revenue and land.
Source: Based on reporting from Firstpost.