New Delhi: Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026. The Lok Sabha cleared it on August 12. The Rajya Sabha passed it on August 13. The Bill now awaits the President's assent to become an Act.
The legislation restricts the power of state governments to levy taxes on mineral rights and on mineral-bearing lands. It also declares invalid any such levy that a state has not collected before the amendment takes effect.
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The Bill makes four amendments to the MMDR Act, 1957. Taken together, they shift fiscal control over mineral taxation to the Centre. Union control extends to mineral-bearing lands. Section 2 of the principal Act currently declares Union control over the regulation of mines and the development of minerals. The Bill inserts the words "and mineral bearing lands" into that declaration. A new clause in section 3 defines mineral-bearing land as any land with mineral content meeting parameters prescribed by the Central government.
A new section 9D caps state levies. No tax, cess or other levy may be imposed by a state government on mineral rights or on mineral-bearing lands. The bar covers levies computed on mineral quantity, mineral value, royalty payable "or otherwise". States may impose such levies only in accordance with conditions or restrictions prescribed by the Central government.
Uncollected past levies are voided. Sub-section (2) of section 9D operates notwithstanding any other law, and notwithstanding any judgment, decree or order of any court. Any such levy not deposited with or recovered by a state before the amendment commences shall be "deemed to be invalid at all material times". A proviso states that amounts already deposited or recovered will not be refunded.
Rule-making power moves to the Centre. Section 13(2) gains a new clause (ta). This empowers the Central Government to frame rules setting the conditions and restrictions under which states may impose these levies.
The government said that mineral-bearing lands move from outside the Union's regulatory reach to inside it. Mining that was taxed differently in every state comes under a single Centre-directed framework. New levies that could previously be introduced after mining had begun can no longer be imposed except on the Centre's terms. Retrospective tax demands that could be raised at any time are declared invalid where still unpaid.
The government said that every miner now benefits from a fair and equal framework. That is the government's characterisation, not an operative effect of the Bill.
The Bill's practical bite falls on mineral-producing states, and it does not fall on all of them equally. The differences trace back to which states already had a functioning levy on the statute book.
Three groups are relevant.
States with levies in force. Following the Kesoram ruling, Chhattisgarh, Rajasthan and Madhya Pradesh enacted laws empowering them to collect tax on royalty. One legal analysis of the 2024 judgment lists Chhattisgarh, Madhya Pradesh and West Bengal as having such laws still in force. These states have been collecting. Under the proviso to section 9D(2), what they have already collected is protected from refund. What they had assessed but not yet collected is now void.
States whose levies were struck down. In Bihar and Odisha, similar enactments had been struck down by High Courts for want of legislative competence. The 2024 ruling reopened the path for these states. The Bill closes it again before most of the money moved.
States that legislated after the judgment. Jharkhand is the clearest case. In the window between the July 25 judgment and the August 14 order on retrospectivity, the Jharkhand Assembly passed a Mineral Bearing Land Cess Bill to levy a charge on mined minerals. The cess was structured by weight, at Rs 100 per tonne on coal and iron ore, Rs 70 per tonne on bauxite, and Rs 50 per tonne on limestone and manganese ore, with 50 percent of royalty applied to other minerals.
The exposure is concentrated in the mineral belt. Analysts identified Odisha, Jharkhand and Chhattisgarh as the principal revenue gainers from the 2024 ruling. Madhya Pradesh, Rajasthan, West Bengal and Telangana are the other significant mineral-revenue states.
The voiding provision cannot be read without the Supreme Court's 2024 ruling behind it. In Mineral Area Development Authority vs Steel Authority of India, decided on July 25, 2024, a nine-judge bench held that royalty is not a tax, that state legislatures have the power to tax mineral rights, and that states' power to tax land under Entry 49 of the State List extends to mines and quarries. In a follow-up order, the Court directed that demands would not operate on transactions made before April 1, 2005, that payment be staggered in instalments over twelve years commencing April 1, 2026, and that interest and penalty on demands for the period before July 25, 2024 stand waived.
That twelve-year recovery window opened on April 1, 2026. Section 9D(2) invalidates any of those dues that a state has not already collected. Roughly four months of a 12-year schedule had elapsed.
A government statement lists five issues it attributes to the absence of limits on state levies. These are a heavy tax burden on the sector, unpredictable introduction of levies after mining has begun, multiple levies on production or dispatch, non-uniform rates across states, and retrospective imposition.
The Bill's stated purpose is to provide "certainty, stability and predictability in the fiscal regime" of the mineral sector. The government further argues that excessive fiscal burden makes mining commercially unviable and can lead to mine closures. It contends that steep and uneven levies push industry away from local supply lines. This, it says, raises transport costs and creates a risk of higher mineral imports.
The Lok Sabha passed the Bill by voice vote without discussion, with opposition MPs in the Well of the House. In the Rajya Sabha, an amendment moved by Trichy Siva of the DMK seeking referral of the Bill to a select committee was negatived by voice vote. Some Opposition MPs sought a division, which Chairman CP Radhakrishnan said could not be taken up amid the din.
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Replying to the debate in the Upper House, Minister of Coal and Mines G Kishan Reddy said the legislation does not seek to interfere with the autonomy or revenue rights of states, and aims to ensure uniform mineral rates across the country. Reddy said the Centre was seeking to regulate major minerals such as coal, limestone, iron ore, copper and manganese, while states would retain powers over 49 minor minerals. He said coal was crucial for power generation, citing 73 percent of India's electricity generation as coming from coal.
Two steps remain before the provisions bite. The President must give assent. The Central Government must then notify a commencement date in the Gazette. The commencement date carries direct fiscal consequence. Levies collected by a state before that date are protected from refund. Levies not collected by that date are void. Every week between assent and notification is a week in which a state can still collect and keep.
A third step follows. The Centre must frame rules under the new section 13(2)(ta) setting out the conditions and restrictions under which states may tax mineral rights and mineral-bearing lands. Until those rules are notified, the scope for state levies is undefined.
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