Lower house passes amendments curbing states power to tax minerals

The Lok Sabha passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 Wednesday by voice vote. This bill proposes to put curbs on state governments’ powers to impose taxes, cess or other levies on mineral rights or mineral-bearing lands.

Proposing amendments to the Mines and Minerals (Development and Regulation) Act, mines minister G Kishan Reddy said excessive fiscal burdens make mining operations commercially unviable, discourage mineral extraction, adversely affect mineral production and, in some cases, lead to mine closures.

ET reported on January 1, 2025, that the Centre was planning to curb excessive mining taxes imposed by states.


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Opposing the amendment, Premachandran N K, Lok Sabha representative from Kollam (Kerala) said tax on land and buildings is exclusively jurisdiction of the state. “Through this amendment, government is putting restrictions on imposition of tax on mineral land, which is against the constitution,” he told ET, adding this cannot be done without amending the constitution.

Revolutionary Socialist Party’s Premachandran was the only member of parliament who could raise his objections amid din in the house.

The move to impose these restrictions follows a 2024 Supreme Court verdict allowing states to levy additional taxes on mining operations in their territories. The verdict was followed by fresh mining taxes in Karnataka, Jharkhand and Tamil Nadu.

“This was a much needed step, which will give a required push to the domestic mining sector, bringing parity in mining taxes, cess and levies across states," according to mining policy expert and former director general of Federation of Indian Mineral Industries (FIMI) B K Bhatia.

He also said the absence of such legislation had exposed the country’s mining sector, including PSUs, to an additional burden of more than Rs 1.5 lakh crore imposed by state governments.

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According to Reddy, any fiscal burden imposed on mineral extraction should be guided by a uniform and balanced fiscal framework across the country.

“The cumulative incidence of different levies should not become disproportionate to the economic value and profitability of the mining operations,” he had said while introducing the bill in Lok Sabha.