In July 2024 a nine-judge bench of the Supreme Court settled a forty-year argument: royalty on minerals is not a tax, and states have the power to tax mineral rights and the land that holds minerals. It then let states collect what they were owed back to April 2005, in instalments starting in April 2026. Two years later, in August 2026, Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act in four days. PRS counts about 45 minutes of debate across both Houses. It bars states from taxing mineral rights or mineral-bearing land except on terms the Centre sets, and cancels any such dues not already collected.

This piece sets out what the Act does, what mineral-rich states stand to lose, and what the Centre says it gains. It follows this blog’s pieces on state deficits and commercial coal mines.

From the court to the Act

What the Act does

The Act does not take away royalty, the District Mineral Foundation levy or auction premiums, which states already collect under the central law. What it removes is the separate power the Supreme Court recognised: to tax mineral rights and mineral-bearing land on top of royalty. Future levies are not banned outright, but each would need the Centre’s conditions, which the Act leaves entirely to rules. PRS flags two legal questions: whether cancelling unpaid dues while keeping paid ones treats companies that delayed differently from those that paid, contrary to Article 14, and whether the delegation to the Centre has enough guiding principles.

What the states stand to lose

Mining receipts are PRS’s figures for mining-related heads in each 2026-27 budget; PRS’s comparison table gives Odisha Rs 56,000 crore on a wider set of heads. Jharkhand’s cess is booked across tax and non-tax heads, so it may partly overlap with the mining figure. Budget estimates, not outturns: Jharkhand’s 2025-26 mining receipts came in at Rs 16,000 crore against Rs 21,900 crore budgeted.

The states differ in what they lose. Jharkhand is the clearest case: its 2024 cess, at Rs 100 a tonne on coal and iron ore and Rs 50–70 on bauxite, limestone and manganese, was budgeted at Rs 14,656 crore this year, about 22% of everything the state raises itself. Odisha, which earns about 38% of its own revenue from mining, had not yet levied a new tax: its minister told the Assembly it first needed the Supreme Court to validate its 2004 ORISED Act, under which it expected about Rs 12,000 crore a year. Karnataka’s bill, estimated to raise about Rs 4,713 crore a year, was still awaiting the President’s assent. For Chhattisgarh the loss is an option rather than a budget line.

How much of Jharkhand’s cess was actually paid before the Act commenced is not in any official release. The state Congress president said the state received Rs 1,380 crore from mineral cess in 2024-25 and Rs 7,487.91 crore in 2025-26; if that is right, those sums are kept, and what is lost is the Rs 14,656 crore budgeted for 2026-27 and the claimed dues. The state’s own estimates of the cess’s yearly value range from about Rs 7,110 crore to Rs 11,000 crore.

The arrears

The larger sums are the arrears. Estimates of what mining companies owed states for 2005 onwards run to Rs 1.5–2 lakh crore. Odisha’s Advocate General described more than Rs 1 lakh crore as legitimate dues in an affidavit, as reported; Jharkhand claims Rs 1.36 lakh crore from coal companies and others, a figure that also includes land compensation. Tata Steel alone disclosed a contingent liability of Rs 17,347 crore. Because the first instalments were only due from April 2026, little of this had been paid, and under the Act what was not collected before it commenced is gone. Many of the companies that owed it are central public-sector firms such as Coal India’s subsidiaries and SAIL, so part of the “loss” is a transfer between the Centre’s companies and the states.

The Centre’s case

The Bill’s statement of objects cites a heavy tax burden on the sector and retrospective taxes, and aims for “certainty, stability and predictability”. The argument has substance: coal, iron ore and limestone feed power, steel and cement, and a state cess of Rs 100 a tonne on coal or iron ore would pass into electricity, steel and cement prices across the country, not only in the taxing state. Different levies in each state can also distort where mines are bid for. The Mines Ministry says states will keep about 90% of mining-related payments; that claim could not be checked, and it concerns existing payments rather than the new taxing power.

The counter-argument is about who decides. The Supreme Court found the power to be the states’, and the Act moves it to the Centre by ordinary law rather than constitutional amendment, with almost no debate. Whether that holds will be decided by the challenges Karnataka, Kerala, Telangana and Jharkhand have announced.

What would fix this

• The Centre should publish the rules under the new Section 13, setting out on what terms a state may levy, with a cap per tonne by mineral, so that states know what they can raise and industry knows its maximum cost.
• The Ministry of Mines should publish, state by state, the arrears that the Act cancels and how much was collected before it commenced, with the share owed by central public-sector companies.
• If the Centre’s aim is uniform mineral costs, a shared levy collected centrally and passed to producing states by output would meet it without removing the states’ revenue.
• Laws that reverse a Constitution Bench ruling should go to a standing committee before passage.

These are proposals from this blog, not recommendations any agency has adopted.

What this piece could not establish

The Act (No. 20 of 2026, CG-DL-E-17082026-275519) and its commencement notification (S.O. 4642(E) of 22 August 2026, CG-DL-E-22082026-275676) were read in the Gazette of India’s own text, through the SansadSaar index of the archive.org Gazette of India collection; the provisions and dates above match it. The arrears figures are claims and estimates, not audited amounts, and they overlap. Jharkhand’s cess collections (Rs 1,380 crore in 2024-25 and Rs 7,487.91 crore in 2025-26) come from a party leader, not the state’s accounts. For Karnataka only the mining share of own non-tax revenue was found (54% in 2021-22, 43% in 2022-23); mining receipts for Rajasthan and Madhya Pradesh were not found on a comparable basis and are left out. Karnataka, Kerala and Telangana announced a joint challenge on 20 August, and a LiveLaw analysis says it has been filed; Jharkhand decided on 17 September to challenge the Act. No case number, hearing date or interim order was found by 28 October 2026. This is not legal advice.

Sources and caveats

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.