Why in News?
The Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 to bring more clarity and consistency to the way minerals are taxed. The Bill aims to limit the taxes and other charges imposed by States on mineral rights and mineral-bearing land, creating a more predictable fiscal system. At the same time, the Bill has raised concerns about mineral security, States’ financial powers, fiscal federalism, and Centre–State relations, particularly in light of the Supreme Court’s 2024 judgment on taxation of mineral rights.
Summary
The MMDR Amendment Bill, 2026 aims to make mineral taxation simpler, more uniform and predictable by limiting the taxes and other charges that States can impose on mineral rights and mineral-bearing lands. This could reduce uncertainty, attract investment and boost domestic mineral production.
At the same time, the Bill raises concerns about Centre–State financial relations, the taxation powers of States and the impact of retrospective changes. Therefore, its implementation should strike a balance between mineral security and economic growth, while protecting federal principles and promoting environmentally sustainable mining.
What are the Key Features of the MMDR Amendment Bill, 2026?
- Central Control Over Mineral Lands: The Bill brings mineral-bearing lands under the regulatory control of the Central Government, giving the Centre greater authority over how these lands are governed.
- Limit on State Taxes and Levies: A new Section 9D prevents States from imposing taxes, cesses or other charges on mineral rights or mineral-bearing lands based on the quantity or value of minerals or the royalty paid, unless the Centre allows it under specified conditions.
- Relief from Earlier Dues: Any unpaid or uncollected State levies imposed before the amendment will no longer have to be paid. However, money already paid will not be refunded.
- Centre to Set the Rules: The Bill gives the Central Government the power to make rules laying down when and how States can impose future taxes or levies on mineral rights and mineral-bearing lands.
Significance of the MMDR Amendment Bill, 2026
- More Tax Certainty: It aims to reduce high, multiple and unpredictable taxes and charges, making the financial environment for mining more stable and predictable.
- Uniform Tax System: It can bring greater consistency in mineral taxation across States, reducing differences in levies and making compliance easier for mining companies.
- Boost to Investment and Production: By reducing uncertainty and lowering some mining-related costs, the Bill could encourage more investment and increase domestic mineral production.
Existing Legal Framework Governing Minerals in India
- MMDR Act, 1957: The Mines and Minerals (Development and Regulation) Act, 1957 is the main law that governs the development and regulation of mines and minerals in India.
- Role of the Centre: Under Entry 54 of the Union List, the Central Government can regulate mines and mineral development when Parliament considers such regulation necessary in the public interest.
- Role of States: Entry 23 of the State List gives States powers over mines and mineral development, but these powers are subject to laws made by Parliament.
- States’ Taxing Power: Under Entry 50 of the State List, States can impose taxes on mineral rights, but Parliament can place limits on this power.
- Tax on Mineral-Bearing Land: Entry 49 of the State List gives States the power to tax land, which can also cover land containing minerals.
- How the System Works:
- The Central Government regulates major minerals and decides royalty rates.
- State Governments issue mining leases and collect royalty from mining operators.
- Minor minerals are mainly regulated by State Governments.
- Royalty Is Different from Tax: In its 2024 judgment, the Supreme Court clarified that royalty paid under the MMDR framework is not a tax. It is a payment made for the right to use and extract minerals.
What are the Concerns Regarding the MMDR Amendment Bill, 2026?
- Concerns Over Centre–State Powers: The Bill limits the ability of States to tax mineral rights and mineral-bearing land. This raises questions about whether it reduces the powers given to States under Entry 49 and Entry 50 of the State List. While Parliament can put limits on taxes on mineral rights under Entry 50, its power to restrict taxes on land under Entry 49 is more debatable.
- Possible Conflict with the Supreme Court’s 2024 Judgment: In July 2024, a 9-judge Constitution Bench of the Supreme Court, by an 8:1 majority, ruled in Mineral Area Development Authority v. Steel Authority of India that States have the power to tax mineral rights and mineral-bearing lands. The Court also allowed States to recover certain past dues from 1 April 2005. By cancelling some unpaid past levies, the Bill could change the effect of this judgment, raising questions about Parliament’s legislative powers and separation of powers.
- Article 14 Concerns: The Bill cancels unpaid past levies but does not return money to those who have already paid. This creates a difference between the two groups and could lead to questions about equality before the law under Article 14.
- Too Much Power to the Executive: The Bill allows the Central Government to decide the conditions and limits under which States can impose taxes on minerals. Critics argue that Parliament should clearly define these rules itself instead of leaving such an important issue largely to the executive.
- Possible Loss of State Revenue: Mineral-rich States may lose an important source of tax revenue and financial autonomy if their power to impose levies is restricted. This creates a broader challenge of balancing national control over minerals with the financial interests and powers of States.
What is the Mines and Minerals (Development and Regulation) Act, 1957?
- About the Act: The Mines and Minerals (Development and Regulation) Act, 1957 was enacted by Parliament under Entry 54 of the Union List. It provides the Central Government with the authority to regulate mining and the development of minerals in the public interest.
- 2015 Amendment – Transparent Auctions: The amendment replaced the earlier discretionary system with mandatory auctions for mineral concessions, making the allocation process more transparent. It also created the District Mineral Foundation (DMF) for the welfare of people and areas affected by mining and the National Mineral Exploration Trust (NMET) to promote mineral exploration. Penalties for illegal mining were also strengthened.
- 2016 Amendment – Transfer of Captive Mining Leases: The amendment clarified the meaning of “leased area” and allowed certain captive mining leases to be transferred, subject to prescribed conditions and charges. This helped facilitate mergers, acquisitions and the resolution of stressed assets.
- 2020 Amendment – Wider Participation in Coal Mining: Companies without previous coal-mining experience were allowed to participate in coal and lignite auctions. This opened the sector to more domestic and international players and was aimed at encouraging investment and FDI.
- 2021 Amendment – Captive Mines Get More Flexibility: The distinction between captive and merchant mines was relaxed. Captive mines, which produce minerals for their own industries, 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. The amendment also strengthened the auction-based allocation of mineral concessions.
- 2023 Amendment – Focus on Critical Minerals: Six critical minerals, including lithium, titanium, beryllium, niobium, tantalum and zirconium-bearing minerals, were removed from the list of minerals reserved exclusively for State agencies. This opened them up to private and foreign investment. The Central Government was also given the power to auction critical mineral concessions, while Exploration Licences were introduced to encourage exploration and investment. These changes are important for securing minerals needed for clean energy, advanced technologies and India’s goal of net-zero emissions by 2070.
- 2025 – Mineral Exchange and Captive Mine Sales: The framework introduced the idea of a Mineral Exchange, an electronic marketplace for trading minerals, concentrates and processed metals. The aim was to make mineral trading more transparent and reduce cartels, market manipulation and price-related irregularities. The earlier 50% limit on the sale of minerals from captive mines was also removed, allowing them to sell their surplus production in the open market after meeting their own end-use requirements.
What Measures are Needed to Strengthen Mineral and Mining Regulation in India?
- Better Centre–State Coordination: Set up a permanent Centre–State coordination mechanism for mineral governance. This can help both levels of government work together on taxation, mining leases, auctions, production and the development of major and critical minerals.
- Make DMF Funds More Effective: Ensure that the District Mineral Foundation (DMF) funds actually improve the lives of people living in mining-affected areas. Their use should be transparent and focused on measurable outcomes in health, education, livelihoods and local infrastructure.
- Make Better Use of the Deep Ocean Mission: India should expand exploration of polymetallic nodules and sulphides in the Indian Ocean, which contain valuable minerals such as nickel, cobalt, copper and manganese. At the same time, India should develop its own deep-sea mining technology while maintaining strong environmental safeguards.
- Strengthen the National Critical Mineral Mission: The National Critical Mineral Mission (NCMM) should be used to increase exploration within India, secure mineral resources overseas, promote recycling and develop capabilities for processing, beneficiation and refining. This would help India build a secure supply chain for critical minerals.
- Focus on Mine Closure and Environmental Restoration: Environmental protection should begin during the mining process, not only after a mine closes. Progressive mine closure, land restoration and ecological rehabilitation should be made mandatory throughout the mining lifecycle.
- Take Stronger Action Against Illegal Mining: Technology such as satellite monitoring, drones, GPS-based mineral tracking and electronic permits should be used more widely to identify illegal mining and prevent the unauthorised transportation of minerals.
Conclusion
The MMDR Amendment Bill, 2026 tries to balance two important goals: making the mining sector’s tax system more stable and predictable while protecting the financial powers of States. A uniform tax framework could encourage mining, investment and the production of critical minerals. However, it is equally important to protect the interests and revenues of mineral-rich States, maintain Centre–State balance and ensure that the Bill stays within the constitutional powers of Parliament.
Frequently Asked Questions (FAQs)
1. What is the MMDR Amendment Bill, 2026?
The Bill aims to make mineral taxation more uniform and predictable across India. It limits the ability of States to impose taxes, cesses and other charges on mineral rights and mineral-bearing lands, subject to rules set by the Central Government.
2. What is the importance of the proposed Section 9D?
Section 9D would restrict States from imposing taxes or other levies on mineral rights and mineral-bearing lands. This includes charges based on the quantity or value of minerals or the royalty paid, unless they are allowed under conditions prescribed by the Centre.
3. What did the Supreme Court’s 2024 judgment say about mineral rights?
In Mineral Area Development Authority v. Steel Authority of India, a 9-judge Constitution Bench held that States have the power to tax mineral rights under the Constitution. It also recognised the States’ power to tax mineral-bearing land under the relevant constitutional provisions.
4. What is the National Critical Mineral Mission (NCMM)?
The NCMM is a government initiative aimed at strengthening India’s supply of critical minerals. It focuses on domestic exploration, acquiring mineral resources abroad, recycling, processing, beneficiation and refining to build a secure critical-mineral supply chain.
