Minerals Amendment Bill 2026 seeks uniform mineral taxation. What would it mean for J&K?

Bill bars states from imposing taxes, cess or other levies on mineral rights and mineral-bearing lands except under conditions prescribed by Centre; J&K could gain greater fiscal certainty but face tighter limits on independent mineral taxation

Srinagar, August 15: The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 seeks to establish a uniform and predictable fiscal framework for India’s mineral sector by restricting state governments from imposing taxes, cess or other levies on mineral rights and mineral-bearing lands except in accordance with conditions or restrictions prescribed by the Central government.

The Bill, which amends the Mines and Minerals (Development and Regulation) Act, 1957, has been passed by both Houses of Parliament.

The government said the amendment was aimed at addressing the heavy and uneven fiscal burden on mining, unpredictable introduction of taxes and levies, multiple charges on mineral production or dispatch, differences in levy rates across states and retrospective taxation.

According to the government, such practices have sometimes made mining commercially unviable, discouraged mineral extraction and contributed to mine closures. The additional costs have also disproportionately affected small and medium-sized mining operators, while high and uneven levies have weakened local supply chains and increased transportation costs.

The government further argued that higher domestic mineral costs could encourage industries to rely on imports even when adequate resources were available within the country. Multiple and inconsistent levies could also create cascading tax effects, increase compliance costs and ultimately raise the cost of goods and services.

Key changes

One of the major provisions of the Bill is to bring mineral-bearing lands containing mineral contents under Union regulation. Such lands will be identified according to parameters prescribed by the Central government under the MMDR Act. This would supplement the existing provision under which the Union exercises control over the regulation of mines and development of minerals.

The Bill also introduces Section 9D, which provides that no state government shall impose any tax, cess or other levy, by whatever name called, on mineral rights or mineral-bearing lands. The restriction covers levies based on mineral quantity, mineral value, royalty or any other basis.

However, states may impose such levies subject to the conditions or restrictions prescribed by the Central government.

The amendment also provides for the treatment of past levies. Any levy that had not been paid or collected by a state before the amendment comes into force will be treated as invalid. However, amounts already deposited or recovered before commencement of the amendment will not be refundable.

Further, Section 13 of the MMDR Act has been amended to empower the Central government to frame rules prescribing the conditions or restrictions under which states may impose such levies.

Implications for J&K

For Jammu & Kashmir, economists say the amendment could have important implications for the way mineral resources are taxed and regulated. The proposed uniform framework could reduce the scope for additional or unpredictable local levies on mineral rights and mineral-bearing lands, potentially providing greater fiscal certainty to mining and mineral-based industries operating in the Union Territory.

At the same time, the new framework could limit the administration’s flexibility to introduce or vary mineral-related taxes and cess independently, as such levies would have to conform to conditions or restrictions prescribed by the Central government.

For J&K, therefore, the legislation could bring a clearer and more predictable regime for investors and mineral operators while simultaneously placing mineral-related fiscal policy within a more centrally determined framework. The precise financial implications for the Union Territory would, however, depend on the rules to be framed by the Central government under the amended Section 13 and on how existing mineral-related levies are treated.

Government cites need for certainty

The government said the existing framework had resulted in different tax and levy structures across states and allowed additional charges to be introduced after mining operations had commenced. The resulting uncertainty, it said, could affect investment decisions and undermine the viability of mining operations.

The amendment is intended to provide greater certainty, stability and predictability to the mineral sector’s fiscal regime.

The government has also argued that excessive taxation at the extraction stage ultimately increases the cost of downstream goods and services, affecting consumers. It said fiscal charges on mineral extraction should remain within a uniform and balanced framework and should not outweigh the economic value or profitability of mining.

Focus on mineral security and exploration

According to the PIB backgrounder, the amendment is also expected to support mineral exploration, critical mineral security and sustainable resource development.

The government described the legislation as an important step towards modernising India’s mineral governance and creating a more harmonised framework for mineral development across the country, with the broader objective of supporting economic growth and the government’s Viksit Bharat agenda.