Minerals Bill 2026: Minister Reddy Assures No State Revenue Loss
By ThePip Desk
India’s Mines and Minerals Amendment Bill 2026 centralizes regulation. Minister Reddy assures states won’t face revenue loss despite preventing state taxes on mineral leases.
Parliament has recently passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, a significant legislative change designed to centralize mineral regulation. Coal and Mines Minister G Kishan Reddy has affirmed that this will not negatively impact state revenues or alter their existing financial structures.
The Bill’s core objective is to prevent state governments from imposing various taxes and cesses on mineral leasing rights or mineral-bearing land. This move aims to streamline the tax environment for India’s crucial mineral sector.
Addressing the Mineral Sector’s Tax Burden
India’s mineral industry currently faces a substantial tax burden, with effective tax rates reaching 50-55%. This figure stands significantly higher than the global average, which typically ranges between 35-40%.
- Effective tax rates in India’s mineral sector: 50-55%
- Global average tax rates for the mineral sector: 35-40%
By curbing unpredictable tax impositions and ensuring uniform tax rates nationwide, the government intends to create a more stable and predictable operational environment. This stability is crucial for fostering growth and investment within the mining industry across the country.
New Framework for State Levies
Under the new provisions, states are now explicitly barred from imposing taxes based on the quantity, value, or royalty of minerals. Their permissible levy is effectively limited to royalty charges alone, standardizing revenue collection.
- States are explicitly barred from taxes based on quantity of minerals.
- States cannot impose taxes based on the value of minerals.
- States cannot impose taxes based on the royalty of minerals.
- The Centre will regulate mineral-bearing land according to parameters set in the MMDR Act.
- Any levies not paid or collected by states prior to the amendment’s implementation will be invalidated.
- Amounts already collected by states will not be subject to refund.
This legislative amendment underscores the Centre’s commitment to reforming the mineral sector, aiming for greater efficiency and a more competitive tax regime. The ultimate goal is to remove existing impediments to the sector’s growth and attract further investment.