Mining Amendment Act: Why states are up in arms over mineral taxation

The Rajya Sabha on Wednesday (August 12, 2026) passed an amendment to the Mines and Minerals (Development and Regulation) Act, a move that has triggered strong opposition from several mineral-rich States. The amended law bars State governments from levying any tax or cess on mineral-bearing land and mining operations. Odisha and Jharkhand have accused the Union government of encroaching upon their constitutional powers.

The legislation is designed to bring "stability, certainty and predictability" to the fiscal regime governing the mineral sector. It explicitly states that States shall not impose any tax, cess, or similar levies in connection with mineral rights. The central government argues that this will prevent price arbitrage for the same mineral across States and create an equitable pricing regime.

For context, Tamil Nadu and Jharkhand had introduced mineral-bearing land (MBL) taxes in recent years. Tamil Nadu fixed the levy at ₹160 per metric tonne in 2024, while Jharkhand introduced it at ₹100 per metric tonne in 2025 and later hiked it in multiple tranches. These taxes raised concerns among industries. Cement producers in Tamil Nadu warned that the higher cost of limestone, a key raw material, would ultimately be passed on to consumers. Similarly, in Jharkhand, coal and bauxite users expressed apprehension about rising input costs.

The Federation of Indian Mineral Industries (FIMI), an industry body, has welcomed the amendment. "This should help improve investor confidence and encourage investment in exploration, mine development and expansion of existing mines, which can support higher domestic production and better availability of minerals," FIMI told The Hindu. The law also has retrospective effect, meaning any such levy that was imposed but not collected before the legislation came into force would be deemed invalid.

Opposition to the Act centres largely on federalism and revenue concerns. According to a Comptroller and Auditor General (CAG) report, mineral and petroleum receipts account for about 41.4% of a State's non-tax revenues, making resource-rich States particularly dependent on such income. Former Odisha Chief Minister Naveen Patnaik said the Bill impinges on States' fiscal autonomy and threatens their constitutional rights over resources. In a letter to the incumbent Chief Minister, he warned that the provisions would "disproportionately impact" mineral-rich States like Odisha, leading to "massive revenue losses" and stifling developmental agenda.

Jharkhand Chief Minister Hemant Soren described the treatment of States as "stepmotherly". He said that social security schemes such as the Maiya Samman Yojana, Abua Awas Yojana, pensions, education, and health programmes would be "on the verge of closure" without the revenue from mineral taxation. Kerala's Leader of the Opposition, V.D. Satheesan, has also vowed to mount strong political and, if necessary, legal opposition to the Act.

Union Minister for Coal and Mines G. Kishan Reddy rejected these assertions. Speaking to the press on Thursday (August 13), he said the legislation is aimed at ensuring growth and equitability in the mineral sector. "The government's primary objective is to ensure identical [taxation] rates across States," he argued, adding that the move would promote a uniform and predictable fiscal environment.

The amendment represents a significant shift in the balance of power between the Centre and States over mineral resources. While the Union government maintains that it is necessary for economic uniformity, resource-rich States see it as an infringement on their fiscal rights. The coming weeks may see further political and legal battles as States decide their next course of action.