Now Reading: Centre’s mineral tax bill sparks clash with states
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Centre’s mineral tax bill sparks clash with states
The Lok Sabha and Rajya Sabha have passed the Mines and Minerals Development and Regulation (MMDR) Amendment Bill, 2026, stripping states of the power to levy taxes, cesses, or any charges on minerals beyond what the Centre prescribes. The bill also forgives all unpaid past dues from state-level mineral taxes, shielding mining companies from retroactive liabilities.
The move follows a 2024 Supreme Court ruling that had opened the door for states to claim thousands of crores in back taxes. By overriding that judgment, the Centre aims to create a uniform investment-friendly regime. State governments have called the bill an attack on federalism and plan to challenge it in court.
The dispute traces back to a 1989 case where India Cements challenged Tamil Nadu's additional cess on mineral royalty. A seven-judge bench ruled royalty is a tax, but the new bill effectively nullifies that interpretation for state levies. Critics say the law still does not address deeper bottlenecks like poor geological data, weak infrastructure, and delayed clearances.
Indian Opinion Analysis
The MMDR amendment is the latest round in a 40-year tug-of-war between the Centre and states over who controls mineral wealth. The Constitution lists mineral taxation under the Union List, but states have long used cess and royalty surcharges to raise revenue from mining. The 2024 Supreme Court ruling had given states a potential windfall running into thousands of crores from past dues. By legislating retroactively, the Centre has closed that tap entirely. States like Tamil Nadu, Odisha, and Jharkhand, which rely heavily on mining revenues, will now have to negotiate with the Centre for any additional levy. The bill does not improve India's poor geological data or speed up mining clearances, the two factors that most deter investment. The constitutional challenge will likely reach the Supreme Court in the coming months.
Source: thedailybrief.zerodha.com
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