Centre defends mining tax curbs as states warn of revenue hit
India's central government says the new mining tax restrictions prevent market fragmentation, while mineral-rich states warn of revenue losses.
The central government on Friday defended its decision to restrict new state-level taxes on mining, arguing that uncoordinated levies on mineral rights and mineral-bearing lands inflate domestic costs and break up the national market.
The statement came a day after Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill. The new law bars state governments from imposing fresh taxes, cesses, or other charges on mineral rights and mineral-bearing lands unless explicitly permitted under conditions set by the central government.
The government contends that uneven state taxation makes domestically produced minerals less competitive and pushes industries toward unnecessary imports. It also clarified that the law does not diminish states' authority over land, minerals, or mineral taxes, noting that states will continue to receive roughly 90% of mining-related tax revenues and payments.
Opposition parties and leaders from mineral-rich states have pushed back. Late Thursday, Jharkhand Chief Minister Hemant Soren urged Prime Minister Narendra Modi to reconsider the bill. In a letter posted on X, Soren said mining revenue accounted for 84.9% of Jharkhand's non-tax revenue in fiscal year 2024-25.
"Any substantial restriction on this revenue would directly affect Jharkhand's ability to sustain development, welfare and social-security interventions," he wrote.
The dispute highlights the tension between the centre's push for a unified market and the fiscal dependence of resource-rich states on mining income.