Parliament Passes Law Curbing States' Power To Levy Tax On Minerals & Recover Past Dues
The Parliament has passed an amendment curbing the power of State Governments to impose taxes, cess and other levies on mineral rights and mineral-bearing lands, paving the way for a more uniform fiscal regime for the mining sector.
The Rajya Sabha today cleared the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which was passed by the Lok Sabha yesterday.
A key provision of the Bill is the insertion of a new Section 9D, under which States cannot impose taxes, cess or other levies on mineral rights or mineral-bearing lands based on mineral quantity, mineral value, royalty payable or otherwise, except in accordance with conditions or restrictions prescribed by the Centre.
The law also seeks to invalidate the levies imposed by States before the commencement of 2026 amendment, which have not been deposited or recovered. However, taxes, cess or other levies that had already been deposited with or recovered by a State Government will not have to be refunded.
Notably, in 2024, a 9-judge bench of the Supreme Court had declared that the States have the power to levy tax on mineral rights and that the Union law - Mines and Minerals (Development and Regulation) Act 1957 - does not limit such power of the States. The Court also rejected the Union's request to give only a prospective effect for the ruling, and allowed the States to cover past dues dating back till April 1, 2005.
In the statement of objects and reasons of the Bill, the Centre argued that differing State-level taxes and levies have created uncertainty for the mining industry, including through multiple charges, unpredictable taxation, varying rates and retrospective levies.
According to the statement of objects and reasons, excessive and unpredictable fiscal burdens can make mining operations commercially unviable, discourage mineral extraction and increase the cost of goods and services. The government says the amendments are intended to provide certainty, stability and predictability to the sector.
The Bill was introduced by Coal and Mines Minister G. Kishan Reddy. The law will come into force on a date to be notified by the Central Government in the Official Gazette.