Govt introduces bill to bar state levies on mining, enhance investor interest
New Delhi: The government introduced an amendment bill in the Lok Sabha on Monday to bar states from imposing taxes or any other levy on
New Delhi: The government introduced an amendment bill in the Lok Sabha on Monday to bar states from imposing taxes or any other levy on mining and minerals, aiming to ease financial burden on the sector and improve the commercial viability of mining operations. Through the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, the government also aims to take control of the regulation of mineral-bearing lands containing mineral contents as prescribed in the Mines and Minerals (Development and Regulation) Act of 1957. "Insertion of a new section 9D in the MMDR Act, which provides that no tax, cess or such other levy (by whatever name called) shall be imposed by the State Government on mineral rights; or mineral bearing lands, either based on mineral quantity, mineral value, royalty or otherwise, except in accordance with such conditions or restrictions as may be prescribed by the Central Government," said the bill. Also Read | Govt mulls two-phase truck fuel economy norms amid Bharat Vecto delays The proposal comes over two years after the Supreme Court affirmed states' rights to independently tax mines and mineral-bearing lands, in a ruling that said that royalty paid to the central government on minerals was not a tax.
The government said that the bill aims to reduce the financial burden on mining operations and make them commercially attractive for investments. The bill states that an "excessive" fiscal burden makes mining operations commercially unviable, discourages mineral extraction, adversely affects mineral production and in some cases, leads to mine closures. "And any additional and unpredictable costs may disproportionately lead to an adverse impact on small and medium-scale mining operators. Multiple and inconsistent taxes hamper the development of the mineral industry and slow down economic growth, resulting in a cascading tax effect and high compliance costs," it said. The bill, however, proposes that any such tax, cess or other levy on mineral rights or on mineral-bearing lands already deposited with or recovered by the state government before the amendment bill is passed and comes into effect shall not be liable to be refunded. Queries emailed to revenue departments of the mineral-rich states of Odisha, Chhattisgarh, Jharkhand, Rajasthan, Madhya Pradesh and Karnataka were not immediately answered. Sidhartha Jain, tax partner with EY India, said that the proposed amendment comes against the backdrop of the Supreme Court's MADA (Mineral Area Development Authority) judgment, following which additional state levies and demands raised concerns over tax burden, legacy liabilities, litigation and uncertainty for the mining sector.
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