- CCL-BCCL annualised Jharkhand cess exposure exceeds INR 5,300 crore
- West Bengal coal cesses could face similar legal scrutiny
India’s Mines and Minerals (Development and Regulation) Amendment Act, 2026 came into force on 22 August, potentially reshaping the statutory cost of coal produced across several major mining states.
The amendment introduces a new Section 9D restricting states from imposing taxes, cesses or other levies on mineral rights or mineral-bearing land except under conditions or restrictions prescribed by the central government.
For India’s coal market, the significance lies in the sizeable state-specific levies already embedded in coal invoices.
Central Coalfields Ltd (CCL) circulated the commencement notification on 22 August, directing its operating, sales and finance departments to comply with the amended Act. Significantly, CCL also asked its systems team to examine whether changes to its sales module were required.
Jharkhand emerges as biggest immediate exposure
Jharkhand’s Mineral Bearing Land Cess is the clearest example of a levy potentially affected by the amendment.
The cess was introduced at INR 100/t in October 2024, subsequently increased to INR 250/t and eventually raised to INR 450/t from December 2025.
It applies to coal dispatched from mineral-bearing land and affects Central Coalfields Ltd (CCL), Bharat Coking Coal Ltd (BCCL) and Eastern Coalfields Ltd’s (ECL) Jharkhand operations.
BCCL itself notified customers in October 2024 that the cess would apply to all coal dispatches.
At an illustrative cess impact of INR 450/t, Central Coalfields Ltd (CCL), based on a dispatch benchmark of 85.8 mnt, would have an annualised cess exposure of approximately INR 3,861 crore, while Bharat Coking Coal Ltd (BCCL), with a dispatch benchmark of 33.05 mnt, would face an estimated exposure of INR 1,487 crore. Combined, the two companies represent a dispatch benchmark of 118.85 mnt, translating into an indicative annualised cess exposure of approximately INR 5,348 crore.
These are annualised estimates using recent dispatch benchmarks rather than actual FY26 payments, since the INR 450/t rate only became applicable during FY26.
The overall Jharkhand exposure would be higher after including ECL’s Jharkhand mines and private, captive and commercial coal producers.
Coal India state-linked levies run into thousands of crores
Coal India Ltd (CIL) chairman B Sairam has said CIL paid around INR 7,000 crore of additional state-linked levies in FY26, separate from royalty, District Mineral Foundation (DMF) contributions and state Goods and Services Tax (GST).
Jharkhand accounted for around 70% of the identified total, followed by Madhya Pradesh at almost 20%.
However, the full INR 6,940 crore cannot simply be treated as a saving under the new law. Some charges may not qualify as taxes on mineral rights or mineral-bearing land, while others could continue subject to conditions prescribed by the central government.
West Bengal could be another major test
Eastern Coalfields Ltd presents another important dimension because it operates across both Jharkhand and West Bengal.
West Bengal imposes a Rural Employment Cess and Primary Education Cess on coal-bearing land. The combined burden can be equivalent to around 25% of the relevant annual value of coal, which can produce a sizeable per-tonne cost.
For some coal grades, therefore, the West Bengal burden could be comparable with or even exceed Jharkhand’s INR 450/t levy.
Whether these long-standing West Bengal cesses ultimately fall within Section 9D will be an important test of the amended law.
Other coal-producing states also exposed
The issue extends beyond Jharkhand and West Bengal.
Coal India’s FY26 figures show INR 1,375 crore of additional state-linked payments in Madhya Pradesh, principally affecting operations of Northern Coalfields Ltd (NCL), Western Coalfields Ltd (WCL) and South Eastern Coalfields Ltd (SECL).
Another INR 575 crore was paid in Chhattisgarh, where SECL has extensive operations, while Uttar Pradesh and Odisha accounted for smaller amounts.
These figures indicate potentially significant exposure, but the underlying charges need to be examined individually before they can be classified as levies affected by Section 9D.
Royalty, District Mineral Foundation contributions, National Mineral Exploration Trust (NMET) payments, Goods and Services Tax, auction premiums and legitimate service-related charges are not automatically abolished by the amendment.
Consumers could be the main beneficiaries
The potential savings should also not be interpreted as a direct profit windfall for Coal India.
Levies such as the Jharkhand Mineral Bearing Land Cess are generally passed through to coal consumers and remitted to the state. Their removal would therefore primarily reduce the mine-mouth cost paid by power plants, steelmakers and industrial consumers. The potential impact is meaningful.
At an estimated saving of INR 450/t on annual coal procurement, the potential cost savings would be INR 45 crore for 1 mnt, INR 225 crore for 5 mnt, and INR 450 crore for 10 mnt of annual coal requirement, highlighting the significant financial impact achievable through procurement cost optimisation.
For a large power utility consuming 10 mnt/year of Jharkhand coal, removal of the cess alone could reduce gross coal costs by around INR 450 crore/year.
Domestic coal competitiveness could improve
A INR 450/t reduction is equivalent to roughly $5/t, making the amendment relevant to the domestic-versus-imported coal equation.
Indian consumers ultimately compare the delivered cost of domestic coal, including statutory levies and railway freight, with imported coal including cost and freight (CFR) price, port charges and inland logistics.
Removing around INR 450/t at the mine could improve domestic coal competitiveness, particularly for consumers located far from India’s eastern coalfields where rail freight is already substantial.
BCCL introduces an additional coking coal dimension. As India’s principal domestic producer of prime and medium coking coal, a lower statutory burden on BCCL coal could improve the economics of domestic coking and washed coal relative to imported metallurgical coal.
Legal uncertainty remains
The eventual impact is not yet certain.
The amendment follows the Supreme Court’s 2024 judgment recognising states’ constitutional powers to tax mineral rights and mineral-bearing land. The new restrictions are consequently expected to face legal challenges from mineral-producing states.
Importantly, CCL’s 22 August circular does not itself withdraw the Jharkhand cess. It directs compliance with the amended Act and flags possible changes to the company’s sales system.
The next important signal for the coal market will therefore be revised billing or pricing instructions from CCL, BCCL, ECL and other Coal India subsidiaries.
If the INR 450/t Jharkhand cess disappears from coal invoices, CCL and BCCL alone represent more than INR 5,300 crore/year of annualised exposure. The impact could expand further if similar mineral-related levies in West Bengal and other coal-producing states are also constrained.
The MMDR amendment could therefore evolve from a constitutional reform into a significant change in India’s coal-cost structure, with the ultimate benefit flowing largely to coal consumers.
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