The Indian government has introduced a Bill in the Lok Sabha to limit state governments’ power to impose taxes on mineral rights, seeking to streamline exploration, boost critical mineral production, and create a more predictable fiscal environment for the sector.
The Union government on Monday introduced a Bill in the Lok Sabha that would curb states’ ability to impose taxes and cesses on mineral rights and mineral-bearing land, as part of a wider overhaul of India’s mining law aimed at speeding exploration and production, particularly of critical minerals.
According to the statement of objects and reasons, the Mines and Minerals (Development and Regulation) Amendment Bill seeks to bring regulation of mineral-bearing land more firmly under central control, building on the existing provision that gives the Union authority over mines and mineral development. The government said the changes are intended to create a more certain and predictable fiscal framework for the sector, which it argues is essential to economic growth and to the broader goals of Atmanirbhar Bharat and Viksit Bharat 2047.
The proposed amendment would insert a new section into the MMDR Act, 1957, barring state governments from levying taxes, cesses or similar charges on mineral rights or mineral-bearing land unless those levies meet conditions or restrictions set by the Centre. It would also deem invalid any such levy that has not been deposited with, or recovered by, a state before the new law takes effect, while protecting amounts already paid or collected from refund claims.
The government said the sector has suffered from uneven and sometimes retrospective taxation by states, which it says has created heavy fiscal burdens, uncertainty and compliance costs. In the Bill’s reasoning, such levies can make mining uneconomic, particularly for smaller operators, and may even encourage higher imports if domestic minerals become too expensive to extract and transport. The Centre also said this can distort markets, raise logistics costs and eventually feed through to the prices of goods and services.
The latest proposal follows a string of earlier changes to India’s mining framework. In April, the Ministry of Mines notified amended concession rules to allow contiguous areas and associated minerals to be folded into leases, a move designed to improve exploration and output of critical minerals. Earlier this year, the government also circulated draft changes to the MMDR law and proposed rules for mineral exchanges, underscoring a broader push to streamline mining approvals, widen lease areas and formalise trading.
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