The Mines and Minerals (Development and Regulation) Amendment Act, 2026 restricts states from imposing certain taxes, cesses and levies on mineral rights and mineral-bearing land.
Jharkhand has opposed the law, arguing that it undermines the fiscal rights of mineral-rich states and could reduce its annual revenue by Rs 8,000–10,000 crore.
The amendment comes after the Supreme Court’s 2024 ruling recognised states’ authority to tax mineral rights and mineral-bearing land.
The article argues that reduced mineral revenue could weaken Jharkhand’s ability to fund welfare schemes, rehabilitation and a just transition in mining-affected communities.
In Kenduadih, a settlement on the edge of Jharkhand’s Jharia Coalfield in Dhanbad, the dangers of abandoned coal mines are not a distant memory.
On December 3, 2025, 28-year-old Priyanka Devi died amid suspected carbon monoxide poisoning from an abandoned colliery. A day later, 58-year-old Lalita Devi died in similar circumstances. On December 30, Surendra Kumar Singh, Priyanka’s neighbour, went to sleep and did not wake up.
All three lived a few hundred metres from an abandoned colliery that was reportedly releasing carbon monoxide through cracks in the ground.
The Union government said it could not confirm that carbon monoxide poisoning caused the deaths. However, according to Down To Earth, local measurements reportedly recorded carbon monoxide concentrations of 1,500-2,000 parts per million, underlining the risks faced by communities living around abandoned mines.
Many families have also been reluctant to move to the Belgadia rehabilitation township, citing concerns over jobs, schools and basic infrastructure. Jharia’s underground fires have burned for more than a century. In the past year alone, gas leaks and land subsidence in the coalfield’s defunct mines have killed at least 20 people.
The Jharia Master Plan, approved in 2009 and revised in 2025 at a cost of around Rs 5,940 crore, was meant to rehabilitate affected families in safer zones and address exactly this problem. But implementation has been uneven, and many families have still not relocated.
The continuing risks raise a larger question: who has the fiscal capacity to address the costs left behind by mining?
Against this backdrop, Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2026. The law restricts states from imposing certain taxes, cesses and other levies on mineral rights and mineral-bearing land, potentially limiting an important source of revenue for mineral-rich states.
The move drew strong opposition from Jharkhand. Chief Minister Hemant Soren described the legislation as a ‘black Bill’ and argued that it undermined the state’s fiscal rights over its mineral resources.
Soren said that by choking off this money, the Centre was putting the state’s most important public welfare programmes at risk. Flagship schemes such as the Mukhyamantri Maiyya Samman Yojana, which provides financial support to more than 50 lakh women, the Abua Awas housing scheme and local pensions for the poor could face severe funding shortages, he said, because the state depends on mining for nearly 85 per cent of its own non-tax income.
That question becomes clearer when we look at what the new law actually changes.
The 2026 amendment changes the fiscal rules around major minerals in two important ways.
First, it brings ‘mineral-bearing land’ — land that contains or sits above mineral deposits — explicitly within the MMDR framework, alongside mines and mineral development.
The earlier Mines and Minerals (Development and Regulation) Act, 1957 dealt with the activity of mining: who is allowed to mine, what permits are required and how minerals are to be extracted. It had little to say about the land itself. Land is primarily a State List subject, and states had the constitutional power to tax land, subject to constitutional limits.
The 2026 amendment adds land containing minerals to the definition of what the mining law covers.
Second, and more consequentially, it inserts a new Section 9D, which prevents state governments from imposing taxes, cesses or other levies on mineral rights, mineral-bearing land or royalty, except under conditions prescribed by the Union government.
States retain their existing powers over minor minerals such as sand, gravel and ordinary clay. But this does not apply to major minerals — coal, iron ore, bauxite and limestone — which generate the bulk of mining revenue for mineral-rich states such as Jharkhand.
The significance of this change becomes clearer in light of the Supreme Court’s 2024 judgment in Mineral Area Development Authority v Steel Authority of India.
On July 25, 2024, a nine-judge Constitution Bench held that states have the constitutional authority to tax mineral rights under Entry 50 of the State List, subject to limitations Parliament may impose by law.
It also held that mineral-bearing land falls within Entry 49, giving states taxing power over such land. The judgment further held that royalty under the MMDR Act is a statutory payment and is distinct from a tax arising from the regulatory framework governing mineral extraction. The ruling overturned the position the court had held since its 1989 India Cement judgment.
A follow-up order from the apex court allowed states to recover dues retrospectively from April 1, 2005. This opened the door for mineral-rich states to pursue sums that had accumulated over nearly two decades. Jharkhand alone put its claim at Rs 1.36 lakh crore, an amount the state says is nearly equivalent to its entire annual budget.
Within two years of the judgment, however, ordinary legislation has substantially closed that door.
The Centre says the amendment is not meant to take away states’ revenue rights, but to make mining taxation more uniform across India.
Union Minister of Mines G Kishan Reddy told Parliament that different state-level levies could make the cost of minerals unpredictable. He said states would continue to receive revenue through royalty, auction premiums, District Mineral Foundation payments and Goods and Services Tax, and that the amendment did not seek to interfere with the autonomy or revenue rights of states.
The government’s main argument is that if mining companies face different taxes and levies in different states, investment becomes more difficult and expensive, and may be discouraged. According to the Union Ministry of Mines, companies face around 14 different levies, while some states impose land cesses of up to 20 per cent.
According to the government, these additional costs can raise the price of raw materials and eventually affect electricity, housing and other goods. It also argues that uniformity in taxation is especially important for critical minerals such as lithium, which India needs for its green energy push and energy transition.
The Centre has also argued that states already receive almost 90 per cent of mining revenue through royalty, auction premiums, District Mineral Foundation funds and GST.
But this raises a basic question: where is the evidence that state-level taxes have actually stopped investment?
The government has said that high levies have made some projects unviable or forced them to shut down. But it has not named a single mine, company or state where this happened. Nor has it clearly stated how much investment was lost for this reason. Without such evidence, the claim that state-level taxation is a major barrier to mining investment remains difficult to assess.
There is also a second problem with the government’s claim that states will not lose revenue. States may continue to receive royalty and GST, but that does not address the additional taxing power recognised by the Supreme Court in 2024.
For Jharkhand alone, it was estimated that a mineral-bearing land cess could generate around Rs 7,110 crore a year. The state was also entitled to recover about Rs 1.36 lakh crore in unpaid past taxes following the Supreme Court judgment.
More recently, the Jharkhand Economic Survey reported that mining accounted for 85 per cent of the state’s own non-tax revenue in 2024-25, up from 71.9 per cent in 2018-19. The state has also estimated that the 2026 amendment could reduce its annual revenue by Rs 8,000-10,000 crore.
If the real goal was to make mining taxes more predictable, removing state taxing powers was not the only possible solution. The Centre could have created a GST Council-like body, where the Centre and states together decided common limits on mining taxes. That would have made taxes more predictable for companies while allowing states to keep their constitutional powers.
Instead, the new law takes that power away from states altogether.
This debate is not only about how much money a state receives. It is also about who benefits from India’s natural resources, and whether the states that provide those resources have enough money to meet their own development needs.
Jharkhand is a clear example. The state sits in the Chhotanagpur Plateau, one of India’s major mineral-rich regions, with large deposits of coal, iron ore, copper and other minerals. Jharkhand alone accounts for about 40 per cent of India’s mineral resources, according to the state’s Department of Mines and Geology.
These minerals support India’s electricity, steel and other industries. Yet many of the environmental and social costs associated with mining, including pollution, damage to land and forests, and displacement, are concentrated in communities living around mining areas.
Jharkhand also continues to face serious development challenges. According to NFHS-6, chronic child malnutrition, measured by stunting, declined from 39.6 per cent in 2019–21 to 35.0 per cent in 2023–24, but remains above the national level of 29.3 per cent.
The state also recorded a multidimensional poverty headcount ratio of 28.81 per cent in 2019-21, according to NITI Aayog, compared with 14.96 per cent nationally.
These figures do not mean that mining revenue alone can address poverty or malnutrition. They do, however, underline the importance of fiscal resources for a state still working to improve basic services and human development.
The broader issue, therefore, is fiscal imbalance. Jharkhand’s minerals contribute to national economic growth, while many of the costs of extraction are borne locally.
This is why the issue goes beyond state budgets. If states lose an important source of revenue from resources found within their territory, they also lose part of their ability to invest in the communities and areas that bear the costs of mining.
The Act received presidential assent on August 17, 2026, and is now law. But the debate is unlikely to end there.
The next major question could be whether the new law can legally restrict the powers that states have to tax mineral rights and mineral-bearing land. The Supreme Court had recognised these powers in its 2024 judgment under Entries 49 and 50 of the Constitution.
Another question is what happens to taxes and levies that states had already imposed before the new law. The amendment says that certain earlier levies will be treated as invalid. This could lead to further legal challenges over whether Parliament can alter the financial rights that states had exercised under the earlier legal framework.
There is also a longer-term concern. Jharkhand is planning a just and sustainable transition. Losing potential mineral revenue could make that transition more difficult.
The amendment may make mining taxation more uniform across India. But legal challenges may take years to resolve, while the problems facing mining-affected communities cannot simply be put on hold.
For places like Kenduadih, where people continue to live with the risks left behind by mining, the question of who has the resources to address those costs is not an abstract constitutional debate.
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth