The government introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 in the Lok Sabha to prohibit state governments from imposing taxes or other levies on mineral rights and mineral-bearing land. The bill seeks to reduce the financial burden on mining operations and improve the commercial viability of the sector in order to attract investment. The measure was presented as part of a wider effort to bring mineral-bearing land within central regulatory control.

The bill proposes insertion of a new section nine D in the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) that would prevent states from imposing tax, cess or other levies on mineral rights or mineral-bearing land except in accordance with conditions or restrictions prescribed by the Central government. It would therefore centralise the framework for such levies and require future state impositions to follow parameters set by the Centre. Drafting in the bill also seeks to define mineral-bearing land by the parameters that the Centre will prescribe.

The proposal followed a Supreme Court ruling delivered on 25 July 2024 in the Mineral Area Development Authority versus Steel Authority of India Ltd case, which affirmed that the power to tax mineral rights resides with state governments and clarified that royalty paid to the central government on minerals was not a tax. The government argued that excessive and unpredictable fiscal burdens make some mining operations commercially unviable, discourage extraction and can lead to closures, particularly for small and medium-scale operators. The bill proposes that levies already deposited with or recovered by states before the amendment comes into effect would not be refunded.

The ministry said the changes aim to reduce multiple and inconsistent taxes that hamper the development of the mineral industry and raise compliance costs. Queries to revenue departments in major mineral-producing states were not immediately answered. Tax advisers noted that the amendment responds to concerns about legacy liabilities, litigation and uncertainty arising after the MADA judgment and that it seeks to provide a framework for future state taxation.

The bill also seeks to accelerate exploration and production of critical minerals such as lithium, nickel and cobalt to strengthen domestic supply chains and reduce dependence on China. Officials indicated that clearer fiscal and regulatory rules are expected to enhance predictability and support investment in mining and downstream industries. The move is presented as a step towards faster development of minerals critical for renewable energy and defence manufacturing.