Key Details
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, introduced in the Lok Sabha, seeks to create a nationally coordinated framework for State taxes and cesses on mineral rights and mineral-bearing land.
Feature | Proposed Change |
|---|---|
Central control | Extends the MMDR Act’s declaration of Union control to the regulation of mineral-bearing land |
Mineral-bearing land | Land containing minerals according to parameters prescribed by the Central Government |
State taxation | Permitted only under conditions or restrictions prescribed by the Centre |
Levies covered | Taxes, cesses and other levies linked to mineral rights, land, mineral quantity, value or royalty |
Outstanding past levies | Deemed invalid if not deposited or recovered before the amendment commences |
Amounts already collected | Retained by States and not refundable |
Financial impact | No expenditure from the Consolidated Fund of India |
The Bill Seeks a Common Framework for State Mineral Levies
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 proposes to regulate how States tax mineral rights and mineral-bearing land, seeking greater uniformity in the fiscal regime governing mining.
A new definition of “mineral bearing land” would cover land containing minerals as prescribed by the Central Government. The Bill also expands the statutory declaration of Union control to include mineral-bearing land, alongside mines and mineral development.
The principal change comes through a proposed Section 9D. States would not be able to impose a tax, cess or other levy on mineral rights or mineral-bearing land—where linked to factors such as the quantity or value of minerals or royalty payable—except subject to conditions or restrictions prescribed by the Central Government.
The Centre would receive rule-making powers to specify those conditions, creating a national framework within which State mineral taxation would operate.
The Rationale Is Fiscal Predictability Across States
The Bill's Statement of Objects and Reasons argues that differing State levies have created non-uniform and unpredictable fiscal burdens across mineral-producing regions.
It identifies concerns including:
multiple and overlapping levies;
substantially different rates across States;
retrospective fiscal demands;
uncertainty over the eventual cost of mineral extraction; and
cumulative tax burdens that can affect the commercial viability of mining.
Because minerals feed industries such as steel, power, construction and manufacturing, the Government argues that these costs can extend beyond mining companies to downstream industries and consumers.
The proposed framework therefore seeks to balance States' ability to raise mineral-related revenue with a more stable and nationally coordinated fiscal regime for the sector.
The Bill Also Addresses Existing State Levies
The amendment contains an important transitional provision. Mineral-related taxes, cesses or levies covered by the new restriction that have not been deposited or recovered before the amendment comes into force would cease to be valid.
However, amounts already collected or recovered would not be refunded.
This creates a clear distinction between past collections and outstanding demands: the Bill protects amounts already received while preventing unrecovered liabilities inconsistent with the new framework from continuing after commencement.
The Reform Shifts Greater Fiscal Control Towards the Centre
The broader significance of the Bill lies in the distribution of fiscal authority between the Centre and mineral-producing States.
States would retain the ability to impose qualifying mineral-related taxes or levies, but that power would operate within centrally prescribed conditions and restrictions. The Government argues that this is necessary to prevent fragmented taxation from discouraging investment and undermining coordinated mineral development.
The intended outcome is greater certainty, stability and predictability for mining investment and mineral-dependent industries, supporting wider objectives of domestic mineral production, Aatmanirbhar Bharat and Viksit Bharat 2047.
At the same time, the framework would constrain States' discretion over an important potential source of mineral-sector revenue. The practical balance between national fiscal uniformity and State revenue autonomy will therefore depend significantly on the rules subsequently prescribed by the Central Government.
Policy Relevance
Federal fiscal balance: The Bill would constrain how States tax mineral resources located within their territories by making those levies subject to Union-prescribed conditions.
Revenue implications for mineral-rich States: The effect on State finances will depend on the restrictions ultimately placed on tax rates, bases and additional cesses.
Relief from outstanding demands: Mining companies may benefit where previously imposed but unrecovered levies become invalid after commencement.
No reopening of collected payments: States will retain amounts already recovered, limiting retrospective refund exposure.
Rules will determine the real impact: The Bill creates the legal power to harmonise State levies but leaves the substantive fiscal framework to delegated legislation.
Investment certainty versus State flexibility: A uniform framework may improve predictability for mining projects, but tighter central limits could reduce States’ ability to respond to local environmental, infrastructure and revenue considerations.
Follow the Full Bill Here: Mines and Minerals (Development and Regulation) Amendment Bill, 2026, Bill No. 154 of 2026, as introduced in the Lok Sabha