Parliament approves Mines and Minerals Bill, limiting states' levy on mineral rights
Parliament on Thursday (August 13, 2026) passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, a legislation that restricts the powers of state governments to levy taxes on mineral rights and mineral-bearing lands. The Bill, which was cleared by the Lok Sabha on Wednesday and the Rajya Sabha on Thursday, will become law once it receives the President's assent.
The Bill aims to amend the existing regulatory framework for mines and minerals, specifically barring states from imposing any additional tax or cess on mineral rights beyond what is specified in the central law. This move is seen as an attempt to create a uniform taxation regime across the country, but it has drawn strong objections from Opposition parties, who argue that it violates the federal structure enshrined in the Constitution.
The passage in the Lok Sabha was not without disruption. The House took up the Bill only after a couple of adjournments earlier in the day, and members of the Opposition trooped into the Well of the House, shouting slogans in protest. Despite the commotion, the Bill was put to vote and passed with the requisite majority.
Revolutionary Socialist Party MP N.K. Premachandran had strongly opposed the introduction of the Bill, contending that it encroached upon the fiscal autonomy of states. He argued that mineral resources are located within the territorial jurisdiction of states, and therefore, states should have the right to levy taxes on them. By circumscribing that right, the Bill undermines the principle of federalism, he said.
The Mines and Minerals (Development and Regulation) Act, 1957, is the principal legislation governing the mining sector in India. Over the years, states have levied various taxes, such as cess and royalty, on mineral extraction within their boundaries. The Supreme Court has historically recognised the states' authority to impose such levies, subject to reasonable limits. The 2026 amendment, however, seeks to centralise this power by explicitly prohibiting states from imposing any additional tax on mineral rights.
Proponents of the Bill argue that multiple and overlapping state levies have created an uneven playing field for mining companies, leading to disputes and litigation. They maintain that a singular national framework will boost investment, ensure consistent pricing of minerals, and reduce the burden on end-consumers. The central government has also hinted that the change would help in better utilisation of mineral resources and promote ease of doing business in the sector.
Critics, on the other hand, fear that the amendment will starve mineral-rich states of crucial revenue. States such as Odisha, Jharkhand, Chhattisgarh, and West Bengal, which are heavily reliant on mining royalties and cess, could face significant fiscal strain. These states have also contended that the Bill is being pushed through without adequate consultation, and that it infringes on the legislative competence of state assemblies.
The Bill's passage in both Houses of Parliament completes the legislative process, but the controversy is far from over. Legal experts suggest that states may challenge the law in court, arguing that it goes against the federal scheme of the Constitution. The matter could eventually reach the Supreme Court, which has in the past delivered nuanced verdicts on the division of taxing powers between the Centre and states over mineral resources.
For now, the Bill awaits the President's assent, after which it will be notified as an Act. The government has maintained that the amendment is in the national interest and will bring clarity to the mining sector, but the Opposition remains unconvinced, calling it an assault on state rights. The coming months are likely to see further political and legal battles over the contentious legislation.
