Parliament Passes Mines and Minerals Bill to Cap State Taxes

Parliament has officially passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, capping the statutory authority of state governments to levy additional cesses, surcharges, or local taxes on mineral extractions within their jurisdictions. The legislation was cleared by both houses during the monsoon session, establishing a uniform ceiling to streamline the national mining regime and curb arbitrary regional taxation across industrial sectors.

This legislative intervention directly responds to a landmark nine-judge Supreme Court ruling that previously affirmed state governments' constitutional power to tax mineral-bearing lands under Entry 50 of List II (State List). However, to mitigate economic distortions and prevent excessive tax burdens on energy, steel, and infrastructure sectors, Parliament invoked its constitutional powers under Entry 54 of List I (Union List) to regulate mining development in the paramount public interest.

Under the key provisions of the new enactment, state-level mineral cesses are strictly capped relative to the base royalty rates mandated under the Second Schedule of the MMDR Act, 1957. The law covers essential natural resources including iron ore, bauxite, coal, and copper, while establishing a centralized dispute resolution mechanism to adjudicate revenue disagreements between state mining departments and commercial leaseholders within a statutory six-month timeframe.

The policy safeguards essential industrial supply chains and fosters foreign direct investment in deep-seated minerals, despite opposition from mineral-rich states like Jharkhand and Odisha concerning fiscal autonomy. For competitive examinations, this news serves as a critical reference for UPSC Prelims questions on Seventh Schedule constitutional lists and Mains GS Paper II discussions on fiscal federalism.