Rajya Sabha Passes Bill Restricting States' Tax Powers Over Minerals

Parliament on Thursday passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which seeks to restrict the powers of states to levy taxes on mineral rights and mineral-bearing lands. The Lok Sabha had cleared the legislation on Wednesday, while the Rajya Sabha passed it on Thursday, completing the parliamentary approval process. The bill will become law after receiving the President’s assent.

Replying to the debate in the Rajya Sabha, Mines Minister G Kishan Reddy maintained that the legislation was not intended to interfere with the autonomy or revenue rights of states. He said the proposed changes were aimed at ensuring uniformity in mineral rates across the country. Reddy said the Centre would regulate major minerals including coal, limestone, iron ore, copper and manganese, while states would continue to exercise powers over 49 minor minerals.

Reddy defended the importance of coal to the country’s energy requirements, stating that 73 per cent of India’s electricity generation comes from coal. He argued that reliable electricity availability was essential for Indian industries to remain competitive globally. The minister also alleged irregularities in the allocation of coal blocks under the previous Congress-led government and maintained that mineral allocations during the past 12 years had been conducted transparently through auctions.

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The minister further argued that states’ share of mineral revenue had increased from 65 per cent in 2014-15 to 85 per cent currently, while their share of coal revenue had risen from 51 per cent to 96 per cent. Reddy said the Centre receives about 11 per cent of mineral revenue, with around 88 per cent going to states, and maintained that no state would suffer revenue losses because of the amendment.

Reddy also cited Entry 54 of the Union List, which gives Parliament the authority to regulate mines and mineral development in the public interest. He argued that taxation was an important instrument for regulating and developing the mineral sector. The government’s position was challenged by Opposition members, who raised concerns over the proposed restrictions on states’ taxation powers.

The debate in the Rajya Sabha took place amid repeated slogan-shouting by Opposition MPs, who also raised other issues during the Monsoon Session. Some Opposition members demanded the presence of Home Minister Amit Shah over concerns related to police action against students protesting at Jantar Mantar over an alleged medical entrance examination paper leak. They also raised allegations concerning donations made to the Ram Temple in Ayodhya.

The bill was passed after the House rejected by voice vote an amendment moved by DMK MP Tiruchi Siva seeking to refer the legislation to a select committee of the Rajya Sabha. Some Opposition MPs sought a division on the amendment, but Chairman CP Radhakrishnan said such an exercise could not be conducted amid the disruption in the House. With both Houses having approved the legislation, it now awaits the President’s assent.

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