Rajya Sabha Amends Mines & Minerals Act to Ban State Taxes on Minerals – States Challenge Federal Autonomy
On 12 August 2026, the Rajya Sabha amended the Mines and Minerals (Development and Regulation) Act to prohibit states from taxing mineral extraction, sparking opposition from mineral‑rich states that cite revenue loss and federal overreach. The move aims to create a uniform fiscal regime, boost investor confidence, and…
Overview The Rajya Sabha on 12 August 2026 passed an amendment to the Mines and Minerals (Development and Regulation) Act (MMDR Act). The amendment bars all Indian states from levying any tax, cess or similar charge on mineral‑bearing lands, mineral extraction or related operations. The law is retrospective, meaning any levy imposed but not collected before the amendment is deemed invalid. Key Developments States such as Odisha , Jharkhand , Kerala and Tamil Nadu have protested, claiming loss of revenue and violation of constitutional fiscal powers. The amendment aims to create “stability, certainty and predictability” in the mining fiscal regime and to avoid price arbitrage across states. Earlier, Tamil Nadu imposed a mineral‑bearing land tax of ₹160 per metric tonne of limestone (2024) and Jharkhand levied ₹100 per metric tonne on coal and bauxite (2025), later increased in tranches. The FIMI says the amendment will boost investor confidence and domestic production. According to the CAG , mineral and petroleum receipts form about 41.4 % of a state’s non‑tax revenue. Union Minister G. Kishan Reddy defended the amendment, saying it targets only “major minerals” and does not affect minor minerals, which remain under state control. Important Facts The amendment lists major minerals such as coal, lignite, iron ore, graphite, cobalt, lithium and nickel . It applies to eleven states: Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, Goa and Gujarat (note: Gujarat appears twice in the source). The Centre highlighted that states’ share in overall mineral revenue rose from **65 % to 88 %** (FY 2014‑15 to FY 2024‑25) and for coal from **55 % to 96 %**
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Key Insight
Centre bans state mineral taxes, sparking a federal‑fiscal clash.
Key Facts
- 12 Aug 2026: Rajya Sabha passed amendment to the MMDR Act prohibiting state taxes on mineral extraction.
- The amendment applies to major minerals – coal, lignite, iron ore, graphite, cobalt, lithium and nickel.
- Eleven states (AP, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, Goa and Gujarat) are covered.
- CAG reports mineral and petroleum receipts constitute 41.4 % of a state’s non‑tax revenue.
- State share in overall mineral revenue rose from 65 % (FY 2014‑15) to 88 % (FY 2024‑25); for coal from 55 % to 96 %.
- Union Minister G. Kishan Reddy said the amendment targets only ‘major minerals’, leaving minor minerals under state control.
- Relevant constitutional provisions: Article 246 (distribution of legislative powers) and Article 268 (taxes on mineral extraction).
Background
Mining is a Union List subject, but states have historically taxed mineral extraction to fund their budgets. The 2026 amendment seeks a uniform tax regime to attract investment, while states argue it infringes on their fiscal autonomy under the Constitution. This tension illustrates the broader debate on fiscal federalism and resource management in India.
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- GS1 — Distribution of Key Natural Resources
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- GS2 — Functions and responsibilities of Union and States
- Prelims_GS — Social and Economic Geography of India
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