The new Bill barring states from levying taxes and cesses on mineral leasing rights or mineral-bearing land will not impact their revenues, Coal and Mines Minister G Kishan Reddy said on Thursday.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, passed by Parliament on Thursday, prohibits state governments from imposing taxes or cesses of any kind on mineral leasing rights or mineral-bearing land. It also brings the regulation of such land exclusively under the Centre.
The Bill aims to reduce the tax burden on the mining sector, curb the unpredictable imposition of taxes and other levies, and ensure uniform tax rates across states. Reddy said the Bill would neither take away any rights of the states nor alter their revenue structure.
“The Centre is not interfering in the financial or mineral situation of the states through this Bill. We only want mineral prices to be uniform across India,” the mining minister said in the Rajya Sabha.
India’s mineral sector faces one of the highest tax burdens globally, with the effective tax rate, including corporate tax, exceeding 50-55% of revenue, compared with a global average of 35-40%.
The Bill specifically provides that the quantity, value or royalty of minerals cannot form the basis for states to impose taxes, effectively leaving royalty as the only levy they can charge on the sector.
The Centre will now regulate mineral-bearing land based on parameters prescribed under the MMDR Act.
Any levy not paid or collected by a state before the amendment comes into force will be treated as invalid. However, amounts already deposited or recovered before the commencement of the amendment will not be refunded.