New mines law seeks to bring tax uniformity

New Delhi: The new Mines and Minerals (Development) Act, 2026, which came into effect over the weekend, seeks to bring greater uniformity and predictability in taxation for the mining sector, which is needed for the financial viability of mining activities, industry executives said.

State governments collect about 14 types of taxes, charges, fees and other levies, including royalty, auction premium, dead rent, payments to district mineral foundations (DMFs), goods and services tax (GST) and transit fees. Some states have also introduced taxes on mineral-bearing lands, adding to the financial burden on mining companies. In certain cases, these additional taxes are as high as 20%.

The latest amendment "provides greater clarity and uniformity in mineral taxation and levies. It also addresses pending retrospective levies, thereby providing greater certainty and confidence to the mining industry," Steel Authority of India Ltd (SAIL) said in a commentary on the change in law.


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The move 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.

By conservative estimates, public sector undertakings were facing an additional hit of ₹1.5 lakh crore because of the states' power to impose such levies.

The new law is expected to directly resolve "long-standing operational bottlenecks by curbing non-uniform state taxes and unexpected cesses that burdened mineral extraction", according to Amitava Mukherjee, chairman and managing director of NMDC.