Parliament passes Mines and Minerals Amendment Bill, limiting state taxation powers

Hindustan Times - India · 15 Aug 2026 · 2 min read
Prelims · Polity Mains · GS2 Polity and constitution High relevance

The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 was passed by Parliament, restricting states' ability to levy taxes on minerals, which has sparked federalism concerns and threats of agitation from mineral-rich states like Jharkhand.

Key points

Mines and Minerals (Development and Regulation) Amendment Bill, 2026 amends the 1957 Act to restrict state governments from imposing taxes on mineral rights or mineral-bearing lands without central government approval.

Federalism debate: The bill has ignited a federalism controversy, with states like Jharkhand, Odisha, and Kerala arguing it infringes on their fiscal autonomy and rights under the State List (Schedule VII) of the Constitution.

Jharkhand's opposition: CM Hemant Soren warned of a massive agitation, stating the bill would cripple the state's ability to fund welfare schemes, as Jharkhand had projected ₹14,656 crore revenue from mineral cess in 2026-27 budget.

Supreme Court context: The amendment follows a July 2024 SC ruling that upheld states' power to levy mineral taxes, which had been seen as a fiscal victory for mineral-rich states.

Central government's rationale: Union Mines Minister cited Entry 54 of the Union List and argued that excessive state taxes disrupt supply chains, increase costs, and cause pollution by encouraging bypassing of local markets.

[GS3-Economy] The bill aims to create a uniform national mineral policy to attract investment in mining sector, but risks alienating states that depend on mineral revenues for development.

Legislative process: The bill was passed via voice vote in Rajya Sabha after Opposition's demand for referral to a select committee was rejected, amid protests on unrelated issues.

Revenue sharing: The Centre claims states receive 88% of mineral revenues currently, and the amendment won't cause revenue loss, but states dispute this assessment.

Way Forward: Establish a mineral revenue sharing formula through the Inter-State Council, create a dedicated mineral development fund for affected states, and introduce compensatory grants for states losing revenue under the new regime.

Key terms

Mines and Minerals (Development and Regulation) Act, 1957

The principal legislation governing mining sector in India, amended multiple times to address evolving policy needs. It regulates mineral concessions, conservation, and development while balancing central and state jurisdictions under constitutional provisions.

Entry 54 of Union List

Constitutional provision (Seventh Schedule) empowering Parliament to regulate mines and mineral development to the extent declared by Parliament to be expedient in public interest, forming the legal basis for central intervention in mineral governance.

Mineral Bearing Land Cess

A state-level tax on land containing minerals, calculated per metric tonne of extracted material. Jharkhand had quadrupled this cess in 2025, demonstrating states' reliance on such levies for welfare funding before the 2026 amendment.

Federalism in Mineral Governance

The constitutional division of powers over minerals between Centre (regulation) and States (land/royalty), which has been a persistent source of tension, especially after the 2024 SC verdict strengthened states' taxation rights temporarily.