Mines and Minerals (Development and Regulation) Amendment Bill, 2026

The MMDR Amendment Bill, 2026 seeks to establish a uniform and predictable fiscal framework for the mining sector by restricting State-level taxes, cesses and other levies on mineral rights and mineral-bearing lands. The Bill aims to reduce taxation-related uncertainty, encourage mineral production and investment, and strengthen India’s mineral security.

However, it has raised important concerns regarding fiscal federalism, State taxation powers, Centre-State relations and retrospective legislation, particularly in light of the Supreme Court’s 2024 judgment on taxation of mineral rights.

Key Features of the MMDR Amendment Bill, 2026

Union Control over Mineral-Bearing Lands

The Bill proposes to amend Section 2 of the MMDR Act, 1957 to explicitly bring mineral-bearing lands under the regulatory control of the Union Government.

Restriction on State Levies

A new Section 9D seeks to restrict States from imposing taxes, cesses or other levies on mineral rights or mineral-bearing lands, whether based on mineral quantity, mineral value or royalty, except under conditions prescribed by the Central Government.

Retrospective Relief

The Bill provides that certain unpaid or unrecovered past levies would become invalid. However, amounts already paid would not be refunded.

Central Rule-Making Power

The Bill amends Section 13 to empower the Central Government to prescribe the conditions and parameters under which States may impose future levies.

Significance of the Amendment

Tax Certainty

The proposed framework seeks to reduce multiple, high and unpredictable levies, thereby providing greater fiscal certainty to mining companies.

Uniformity

A more uniform taxation framework could reduce inter-State disparities and compliance costs, making the mining sector more predictable.

Investment and Mineral Production

Lower regulatory and taxation uncertainty may encourage private investment, domestic mineral production and development of critical mineral resources, which are important for India’s mineral security.

Existing Legal Framework

MMDR Act, 1957

The Mines and Minerals (Development and Regulation) Act, 1957 is the principal central legislation governing the development and regulation of mines and minerals in India.

Constitutional Distribution of Powers

Under Entry 54 of the Union List, Parliament can regulate mines and mineral development when it declares such regulation expedient in the public interest.

Entry 23 of the State List gives States powers over mines and mineral development, subject to Union legislation.

Entry 50 of the State List provides States with the power to tax mineral rights, subject to limitations imposed by Parliament.

Entry 49 of the State List concerns taxes on lands and buildings, which also has relevance for mineral-bearing lands.

Royalty and Tax

An important distinction is that royalty is not a tax. The Supreme Court’s 2024 judgment held that royalty under the MMDR framework is a payment for enjoying mineral rights, rather than a tax.

Major Concerns

Fiscal Federalism

The Bill may affect the fiscal autonomy of mineral-rich States by restricting their ability to impose levies on mineral rights and mineral-bearing lands. This raises questions regarding the balance between national mineral governance and State financial powers.

Supreme Court’s 2024 Judgment

In Mineral Area Development Authority v. Steel Authority of India, an 8:1 majority Constitution Bench upheld the legislative competence of States to tax mineral rights under Entry 50 and mineral-bearing lands under Entry 49.

The Bill’s attempt to invalidate certain unpaid or unrecovered past levies therefore raises questions concerning the interaction between legislative power, judicial decisions and separation of powers.

Article 14 Concerns

The Bill proposes to invalidate unpaid past levies while not refunding amounts that have already been paid. This difference in treatment could raise questions under Article 14, which guarantees equality before law.

Excessive Delegation

The Bill leaves important conditions governing State taxation powers to be prescribed by the Central Government. This raises concerns about excessive delegation because Parliament may need to provide clearer legislative principles.

Loss of State Revenue

Restrictions on State levies could reduce the revenue base and fiscal autonomy of mineral-rich States, potentially affecting their ability to finance development and welfare programmes.

MMDR Act: Important Amendments

2015 Amendment

The 2015 amendment replaced discretionary allocation with auction-based allocation of mineral concessions. It also established the District Mineral Foundation (DMF) for the welfare of mining-affected communities and the National Mineral Exploration Trust (NMET) for mineral exploration.

2020 Amendment

The framework was opened to wider participation in coal and lignite auctions, including companies without prior coal-mining experience, thereby promoting greater participation and investment.

2021 Amendment

The distinction between captive and merchant mines was diluted. Captive mines were allowed to sell up to 50% of their annual production in the open market after meeting the requirements of their linked end-use plants.

2023 Amendment

The amendment opened several previously restricted critical minerals to private participation and introduced Exploration Licences to encourage exploration and investment.

The reform was particularly significant for minerals such as lithium, titanium, beryllium, niobium, tantalum and zirconium-bearing minerals and ores, which are important for emerging technologies and India’s energy transition.

2025

The framework introduced the concept of a Mineral Exchange to facilitate transparent electronic trading of minerals, concentrates and processed metals. It also removed the 50% sale cap for captive mines, allowing production to be sold in the open market after meeting end-use requirements.

Way Forward

Strengthen Centre-State Coordination

A permanent Centre-State mechanism for mineral governance can improve coordination on taxation, mining leases, auctions, production and critical minerals.

Improve DMF Utilisation

The District Mineral Foundation should focus on transparent and outcome-based utilisation of funds for health, education, livelihoods and infrastructure in mining-affected areas.

Strengthen Critical Mineral Security

The National Critical Mineral Mission should support domestic exploration, overseas acquisition, recycling and development of capabilities in beneficiation, processing and refining.

Promote Sustainable Mining

Mining regulation should strengthen progressive mine closure, land reclamation and ecological restoration throughout the mining lifecycle.

Use Technology Against Illegal Mining

Technologies such as satellite monitoring, drones, GPS-based mineral tracking and e-permits can improve monitoring and help curb illegal mining.

Conclusion

The MMDR Amendment Bill, 2026 attempts to balance tax certainty and investment promotion with India’s need for mineral security. However, its implementation must also protect fiscal federalism, State revenue interests and constitutional limits on legislative power. The key challenge is therefore to achieve a predictable mining regime without weakening the Centre-State balance.