The Union government on Monday introduced a bill in the Lok Sabha to restrict states from imposing additional tax on mineral rights, PTI reported.

The bill also seeks to empower the Union government to regulate mineral-bearing lands in accordance with the parameters prescribed under the 1957 Mines and Minerals Development and Regulation Act, the news agency reported.

Union Minister of Coal and Mines G Kishan Reddy introduced the 2026 Mines and Minerals Development and Regulation Amendment Bill amid protests by Opposition members.

According to the bill, “no tax, cess or such other levy (by whatever name called) shall be imposed by the state government on mineral rights”.

The proposed provisions would cover mineral-bearing lands, with their applicability determined by factors such as the quantity or value of minerals, royalty payments or other prescribed criteria. Such lands would be subject to conditions and restrictions specified by the Union government, PTI reported.

The bill, however, clarifies that any tax, cess or other levy on mineral rights or mineral-bearing lands that was paid to or collected by a state government before the provisions take effect “shall not be liable to be refunded”.

Reddy said that the amendments seek to “provide certainty, stability and predictability in the fiscal regime in the mineral sector,” the news agency reported.

However, Revolutionary Socialist Party MP NK Premachandran contended that the bill was against the principles of federalism.

On July 25, 2024, the Supreme Court had ruled that states have the power to levy tax on mines and minerals. The court held that the royalty collected by state governments under Section 9 of the 1957 Mines and Minerals Development & Regulation Act, is not a tax.

At present, the Union government’s jurisdiction primarily extends to the development and operation of mines, including mineral exploration, extraction and licensing, The Telegraph reported.

However, the mineral-bearing land itself does not explicitly fall within the Union government’s regulatory ambit.

Edited by Neerad Pandharipande.

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