Two years ago, a nine-judge bench of the Supreme Court closed a fight over mining taxes that had run since 1989. States, it ruled, can tax mineral rights and mineral-bearing land. Delhi cannot take that power away except by saying so expressly in law.

Towards that, last week, Parliament passed the MMDR Amendment Bill, 2026, set to become law after the President's assent.

Who Gets To Tax?

The old fight was about royalty, the fee a miner pays a state for the right to dig.

In 1989, the Supreme Court's India Cement ruling treated royalty as a tax, which meant only Parliament could touch it. States spent three decades arguing they had a separate, older power to tax mineral-bearing land itself, not the royalty on it.

In July 2024, a nine-judge bench settled it by an eight-to-one majority. Royalty, it ruled, is not a tax but a contractual payment.

States can therefore tax mineral rights and mineral-bearing land under their own constitutional powers, unless Parliament has explicitly stepped in to restrict them. The mining law in force, the court noted, had imposed no such restriction.

A follow-up order let states chase the money retrospectively, back to April 2005, paid out over twelve years starting this April.

For Odisha, Jharkhand and Chhattisgarh, it amounted to a windfall, albeit one arriving nearly two decades late.

The dispute comes down to three competing powers, all set out in the Constitution’s Seventh Schedule, which divides legislative powers between the Centre and the states.

Entry 50, in the State List, is titled "taxes on mineral rights". It lets a state tax the right to mine, the licence, subject to any limits Parliament sets by law. Entry 49, also in the State List, is titled "taxes on lands and buildings”.

It lets a state tax land, any land, mineral-bearing land included. Entry 54, in the Union List, is titled "regulation of mines and mineral development”. It lets Parliament regulate mining itself and, if it says so clearly, cap what states can do under Entry 50.

The 2024 judgment accepted that all three could coexist. What it rejected was the idea that the Centre could use its power to regulate mining under Entry 54 to effectively erase the states’ separate power to tax land under Entry 49. Delhi, in other words, could not create a fourth constitutional power for itself simply by legislating under one it already had.

The Bill That Talks Back

The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, cleared both Houses on 13 August and now awaits the President's signature.

The bill would extend the Centre’s control beyond mines to “mineral-bearing land,” a term whose parameters Delhi will define later. More consequentially, it inserts a new Section 9D that bars states from taxing mineral rights or mineral-bearing land — whatever form the levy takes — unless the Centre’s rules permit it.

That has an immediate consequence. Any state levy not collected before the law takes effect would become void. Money already collected stays with the state. Money that has been assessed but not collected could disappear.

There is no official estimate of how much revenue states could lose each year.

The bill’s Financial Memorandum records no recurring or non-recurring expenditure for the Union, and it carries no state-wise assessment of the levies Section 9D voids.

The only estimates on record come from the aggrieved states themselves.

The beneficiaries, however, are easier to identify.

Coal India and its subsidiaries, along with Steel Authority of India, get relief from retrospective demands that were building into tens of thousands of crores.

NMDC, India's largest iron ore miner, has welcomed the bill on similar grounds, saying it lets the company plan mine economics on more stable assumptions instead of an open-ended tax overhang.

Why bother? Because miners currently face fourteen different state charges, royalty, dead rent, District Mineral Foundation contributions, transit fees, layered unevenly, sometimes added after a project is already sanctioned. India imported Rs 10.12 lakh crore of minerals last year. Unpredictable state taxes, the Mines Ministry argues, push miners toward imports instead of digging at home.

The 90% Promise

Ask Jharkhand what this bill costs, and the number is precise.

Chief Minister Hemant Soren has written to the Prime Minister flagging that mining brought in 84.9% of the state's non-tax revenue in FY25, and that its Mineral Bearing Land Cess, just two years old, was on track to raise Rs 11,000 crore a year.

That cess is exactly the kind of levy Section 9D voids going forward.

Odisha's number is bigger and blunter.

The opposition BJD puts the state's annual loss at Rs 12,000 crore, on top of over Rs 1 trillion in dues it has not yet collected since the 2024 verdict, and now may never get to. Odisha runs roughly 600 mining leases across 100,000 hectares, and holds 34 of the country's 101 auctioned mineral blocks in production, more than any other state.

Industry-wide, arrears from the retrospective window are estimated at Rs 1.5 to 2 trillion. Jharkhand collected in time. Odisha did not, and that timing gap is now the difference between money in hand and money the law just cancelled.

Add up what has been published and the identifiable recurring exposure is already around Rs 23,000 crore a year across just these two states, before Chhattisgarh, Madhya Pradesh, West Bengal or Karnataka put figures to their own levies. That back-of-envelope sum, drawn from the states’ own annual estimates, is the closest thing to an aggregate anyone outside government has produced.

The Centre's answer is a different set of numbers entirely.

The Ministry of Mines says that states already keep around 90% of total mining taxes and payments, and that will not change.

Between FY16 and FY26, major mining states collected over Rs 5 lakh crore against roughly Rs 82,000 crore for the Centre, plus another Rs 96,000 crore in auction premiums between FY21 and FY26. By that account, nothing is being taken away.

Yet a number has not been put on the retrospective clause. How much does invalidating uncollected state dues save mining companies? Delhi has not said.

It helps to know what the 90% is built from.

The ministry’s count covers the roughly fourteen statutory payments that already flow to states under the mining law and general tax law: royalty, auction premiums, dead rent, DMF contributions, transit fees and the states’ share of GST.

Section 9D does not touch those payments. They were never the dispute.

What it targets is the single category outside that list: taxes states impose under their own constitutional powers on mineral rights and mineral-bearing land, of which Jharkhand’s cess is the template.

The 90% figure, in other words, is computed entirely from payments the bill leaves alone, while the one revenue stream states design and price themselves — the stream the bill extinguishes — appears nowhere in the calculation.

Both numbers can be true at once, and that is the trap. States can keep 90% of a shrinking pie and still be worse off, if the pie itself — what counts as a taxable event, what rate is allowed, whether backdated claims survive — is now baked by rules only Delhi writes.

A 90% share of a base you no longer control is not the same promise as a 90% share of a base you do.

Whose Land Is It, Anyway?

Here is the part that will end up in court, not the money.

The 2024 judgment let Parliament limit states' power to tax mineral rights, Entry 50, but only through an express law. Section 9D supplies that limit, and for mineral rights, it probably works.

Mineral-bearing land is a different constitutional animal. That sits under Entry 49, a general state power over land, which the same judgment separately protected. Parliament cannot narrow a state's Entry 49 power just by legislating under its own Entry 54 mandate over mines.

As Akash Lamba of SKV Law Offices told Business Standard, renaming land as "mineral-bearing" by prescribed parameters does not create a Union power the Constitution never handed Parliament.

Lawyers at Cyril Amarchand Mangaldas, cited in the same Business Standard report, go further: capping what states can do under Entry 49 is not something an ordinary Act can achieve at all.

Getting there lawfully means changing Entry 49 itself, which means the Seventh Schedule, which means Article 368 and the states' own ratification, not a rules clause slipped into a mining statute.

Khaitan & Co's Shivanshu Thapliyal, quoted in the same piece, adds a second flag: wiping out dues Parliament itself once recognised as valid may be a limit even a constitutional amendment cannot lawfully cross, since it starts to look less like a restriction and more like a blanket ban dressed up as one.

None of this means Section 9D is doomed. The Union has declared mines and mineral development a matter of national public interest since the original 1957 Act, under Entry 54, and Delhi could plausibly argue that mineral-bearing land is not a separate subject from the minerals in it, but part of the same field.

The doctrine that would carry that argument is a real one, not invented for this dispute: in State of Rajasthan v G Chawla, the Supreme Court held that the power to legislate on a subject carries with it the power to legislate on ancillary matters reasonably included in that power, so long as the ancillary matter is not itself explicitly claimed by another list.

Whether mineral-bearing land counts as reasonably necessary to regulating mines, rather than a distinct subject Entry 49 protects in its own right, is precisely what a court would now have to decide.

The bill's defenders are not being cavalier when they call this constitutionally arguable rather than certain to fail; they are describing a genuinely open question, not a lost cause dressed up as legislation.

Put plainly: Delhi may have picked the fast lane for a destination the Constitution says needs the slow one, but it is not obvious, even to lawyers who disagree with each other, that the fast lane necessarily dead-ends.

The political opposition, meanwhile, is going beyond mere rhetoric.

Soren’s letter to the Prime Minister is on record, and he has since called the legislation a “black bill” and an injustice to Jharkhand.

Kerala’s Chief Minister V D Satheesan has announced that the state’s objection will be formally conveyed to the Centre, calling the bill an encroachment on the State List, with legal action to follow once it becomes an Act.

Opposition-ruled states under the INDIA bloc have declared their intent to challenge the law in the Supreme Court, and Karnataka says it is examining the implications for fiscal federalism.

The conspicuous absence is Odisha’s own government: the state with the most to lose is governed by the party that drafted the bill, which is why the loudest numbers out of Bhubaneswar come from the BJD’s benches rather than the Treasury’s.

Three Ways This Ends

The first way is a courtroom. Odisha, sitting on over Rs 1 trillion it has not yet collected, has every reason to challenge Section 9D before more of that number disappears. Jharkhand's case is narrower but sharper: a law voiding revenue that it has already, legitimately, raised.

The second is political. Soren has separately proposed a GST Council-style body to bring mineral states into the room before Delhi writes the actual rules under Section 9D. This matters more than it sounds.

The bill sets no rates and no caps itself; all of that lands in future rulemaking. Whoever is in the room when those rules are drafted effectively decides what the states' 90% is worth.

The third is the constitutional route Parliament skipped. If Delhi wants durable, uniform limits on how states tax mineral-bearing land, Entry 49 is where that power lives, and Entry 49 is what would need to change, with the states' own consent built into the process.

Each route settles a different question, worth keeping separate. Litigation decides whether Section 9D survives at all, a binary outcome, yes or no, that could take years to reach given how the 2024 case itself moved through the courts.

The GST-Council route decides nothing about legality, only about how painful the rules turn out to be for states in practice, It can start working immediately, before any court rules on anything.

The constitutional-amendment route is the only one that actually closes the argument for good. It is also the one with the least political appetite behind it right now, since it hands states a formal veto Delhi has just spent a bill trying to avoid.

The Two-Year Round Trip

Every mineral-rich state carries some version of this exposure, not just the two making the most noise. Chhattisgarh, Madhya Pradesh, West Bengal and Karnataka all had cesses in motion or under discussion after the 2024 verdict.

What separates them is speed: states that collected before 13 August keep what they have. States that did not will not.

There is a real case for the bill too, and it deserves to be stated plainly rather than waved away. A miner deciding where to sink capital is reasonably put off by a state cess arriving mid-project, applied backwards. Folding lithium, cobalt, nickel and rare earths into a predictable tax regime is tied to a genuine strategic goal, cutting India's dependence on Chinese-controlled mineral supply chains.

Where the bill runs into trouble is not the goal. It is the shortcut it may or may not turn out to be.

India's top court spent decades, then nine judges and several months, settling exactly how far Parliament's writ runs into a state's power to tax its own land. Two years later, Parliament has answered back with an ordinary Act reaching for a power that, on one reading, needed a constitutional amendment to claim, and on another, was Parliament's to occupy all along. That gap in reading is not a drafting error. Being the whole case, it is very likely headed back to the court that just closed it.

Two years ago the court drew the line. This bill is Delhi's answer, and the states' answer to that answer is still to come.

For anyone holding a mining lease, or advising someone who does, the practical takeaway is simpler than the constitutional one.

Nothing about state mineral taxation is settled today – not the rate, not the base, and not who gets the final word on either. The 90% may hold. What it is 90% of is still being written.