Mineral Wealth, Tax Powers: What Changes Under the New Mining Bill
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India Mineral Bill: The mining Bill promises cheaper minerals and uniform rules, but could reduce states’ control over taxation and mineral-rich lands.
By Pranjal Gupta
New Delhi, August 11: The Centre has introduced a Bill in the Lok Sabha that could make minerals and mining rules more uniform across India, reducing the role of state governments in taxing and regulating mineral resources.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, proposes to bring the regulation of certain mineral-bearing lands under the Centre's control. The Centre would decide which lands fall under the new framework based on factors such as the quantity or value of minerals, royalty or other parameters prescribed under the law.
The Bill also proposes to prevent states from imposing their own taxes, cesses or other levies on mineral rights, except under conditions or restrictions prescribed by the Centre.
In simple terms, the Centre wants greater uniformity in how mineral resources are regulated and taxed. For states, however, this would mean less freedom to decide how mineral resources in their regions should be taxed.
The Bill states that "no tax, cess or such other levy (by whatever name called) shall be imposed by the state government on mineral rights".
The proposed restriction would also apply to mineral-bearing lands covered by the new framework. A new section would be added to the Mines and Minerals (Development and Regulation) Act to give effect to these changes.
The Bill further proposes that any such tax, cess or other levy that a state has not collected or recovered before the amended law comes into force would be treated as invalid. However, amounts that had already been collected or recovered would not have to be refunded.
Why does the Centre want this?
Union Minister for Coal and Mines G Kishan Reddy, who introduced the Bill amid Opposition protests, said different taxes imposed by states can make minerals more expensive and create uncertainty for businesses.
The government's argument is that if one state imposes significantly higher taxes than another, companies may avoid buying minerals locally or shift their supply chains elsewhere.
This can increase transportation costs and make imported minerals more attractive, even when the required minerals are available within India.
The Centre also says that higher costs at the mining stage can eventually affect industries that use minerals and, in turn, increase the prices of goods and services for consumers.
Reddy said a more predictable tax regime would encourage investment, strengthen domestic mineral supplies and support the government's broader goals of Atmanirbhar Bharat and Viksit Bharat 2047.
But what do states lose?
The other side of the argument is about how much freedom states should have over mineral resources located within their territories.
Mineral-rich states have traditionally had an interest in deciding how these resources are taxed and regulated. State governments can argue that they should retain some flexibility to respond to local economic conditions and the impact of mining in their regions.
The proposed Bill would narrow that space by preventing states from independently imposing taxes on mineral rights and by giving the Centre a larger role in regulating certain mineral-bearing lands.
That does not necessarily mean states will lose all revenue from mining or that the Centre will take over the mines themselves. But it does mean that an important part of the decision-making process would move towards the Union government.
This is where the federalism question comes in. RSP leader N K Premachandran opposed the Bill when it was introduced in Parliament, saying that it goes against the principles of federalism.
One key question that the bill raises: If states can no longer decide how much to tax mineral resources, will they have enough revenue to fund local infrastructure and other needs in areas where mining takes place?
What changes for the states?
The proposed changes would give the Centre a greater role in deciding how certain mineral-rich lands are regulated. At the same time, states would lose the power to impose additional taxes or levies on mineral rights on their own.
This creates a larger question beyond the cost of minerals: how should the economic value of India's mineral resources be shared between the Centre and the states where those resources are located?
The government sees a common framework as a way to prevent excessive or uneven taxation from making Indian minerals less competitive. States, on the other hand, would have less room to use taxation as a tool to manage mineral resources or raise revenue from them.
The issue has already raised concerns over federalism.
RSP leader N K Premachandran opposed the introduction of the Bill, saying it goes against the federal structure.
The debate, therefore, is not simply about whether minerals should become cheaper. It is also about how much control states should retain over resources located within their territories, and whether greater national uniformity is worth reducing that control.
