Mines and Minerals (Development and Regulation) Amendment Bill, 2026
The recent passage of the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, has reignited a debate between the Centre and mineral-rich states regarding the taxation of mineral resources. The bill restricts states from imposing certain levies on mineral rights and mineral-bearing land, despite a Supreme Court ruling in 2024 that upheld states' powers to do so.
State Opposition and Federal Structure Concerns
- States like Jharkhand and Kerala oppose the amendments, citing potential revenue loss and impacts on federal balance.
- Karnataka has proposed similar measures, with Tamil Nadu and Jharkhand already imposing levies.
Impact of Amendments
- The amendments aim to curb what the Centre considers excessive state-imposed levies post the Supreme Court’s 2024 decision.
- The bill will nullify outstanding dues from pre-amendment levies, estimated at Rs 2 lakh crore.
Supreme Court’s 2024 Ruling Effects
- The ruling allowed states to tax mineral rights, contradicting the 1989 India Cement Ltd v. State of Tamil Nadu judgment.
- Some states, like Jharkhand and Tamil Nadu, introduced taxes on mineral-bearing land.
Centre’s Rationale
- Unchecked state levies could increase mineral costs, leading to inflation and higher infrastructure costs.
- The Centre advocates for a balanced levy structure post-consultation with states.
State Revenue from Minerals
- States’ non-tax revenue was Rs 3.3 lakh crore in 2024-25 with 41% from mineral and petroleum.
- For mineral-rich states, these receipts form a significant revenue portion, e.g., 23% in Odisha.
Industry Perspective
- The amendments can enhance fiscal predictability for mining companies but may impact state revenues.
- Experts suggest establishing transparent frameworks with adequate state consultation.
Conclusion
Although the amendments aim to balance industry costs and state revenues, the outcome depends on effective implementation and consultation to ensure both investment certainty and adequate state compensation.
