Kerala CM says mining amendment usurps state's rights, wants PM to reconsider

Thiruvananthapuram: Chief Minister V D Satheesan on Monday shot off a missive to Prime Minister Narendra Modi urging him to reconsider the Mines and Minerals (Development and Regulation) Amendment Act, 2026. The Bill was passed in the Lok Sabha on August 10 without discussion.

The amendment inserts section 9D, which strips the states of their unquestioned right to impose tax, cess or "such other levy" on mineral rights or on mineral-bearing lands. The amendment says that it can be done only in accordance with the conditions or restrictions prescribed by the Central Government.

"This attempt to subordinate a state's right to impose tax on minerals to the conditions prescribed by the Centre would encroach upon a state's constitutionally-granted powers," the Chief Minister said in the letter.

He said the Bill had provisions to bring mineral lands under the control of the Centre and also to deprive the states of tax arrears owed to them. Section 9D has a provision that declares as "invalid" all taxes, cesses and other such levies on mineral rights or mineral-bearing lands that have not been deposited with the State Government or recovered by it before the commencement of the 2026 Amendment. Meaning, all uncollected mining dues will go to the Centre. However, the levies that have already been collected need not be refunded to the Centre.

"This amendment will severely impact a state like Kerala with substantial mineral deposits," Satheesan said in the missive. "Such restrictions on the state's control over its mineral resources will adversely affect the tax revenue of both the state government and local bodies," the Chief Minister said. He sought the PM's urgent intervention in the matter.

The letter pointed out that a 2024 Supreme Court order had ruled that royalty for mining was not a tax. Further, he said states had the right to impose royalty on mining as per Entry 50 of List II (State List) of the Seventh Schedule.

It is true that Entry 50 allows states to tax mineral rights, but it is only a qualified right. Here is what the Entry says: "Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development."

In addition, the CM said that the Supreme Court, while interpreting Entry 49 of the Seventh Schedule, had ruled that states had the authority to levy taxes on mineral lands based on the quantity or value of minerals mined.