What is the latest Mining Amendment Act about? | Explained
Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, amending the parent MMDR Act, 1957.
The Bill inserts a new provision (Section 9D) barring state governments from imposing tax, cess, or other levies on mineral rights or mineral-bearing land — including levies based on mineral quantity, value, or royalty payable — except as permitted by conditions the Central Government prescribes.
The Bill also addresses pending retrospective mineral-tax demands raised by states: dues not already deposited or recovered before the law's commencement are to be treated as not payable, while amounts already collected by states will not be refunded.
Resource-rich states have raised concerns that the amendment reduces their fiscal autonomy and revenue from mining, following a 2024 Supreme Court ruling that had expanded state taxation powers over minerals.
The Bill awaits Presidential assent to become law.
Constitutional Division of Mining Powers — Entry 54 (Union) vs Entry 23 (State)
Mining and mineral regulation is split between the Union and State Lists under the Seventh Schedule (Article 246). Entry 54 of the Union List covers "regulation of mines and mineral development" to the extent Parliament declares such regulation "expedient in the public interest." Entry 23 of the State List covers "regulation of mines and mineral development" subject to the provisions of the Union List.
Key Details
- Entry 54, List I (Union List): Parliament's declaration under this entry (made through the MMDR Act, 1957 itself) is what constitutionally limits state legislative competence under Entry 23.
- Entry 23, List II (State List): "Regulation of mines and mineral development subject to the provisions of List I" — meaning once Parliament legislates under Entry 54, the field is effectively occupied and states cannot regulate the same subject matter inconsistently.
- Entry 50, List II separately empowers states to levy "taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development" — this is the specific entry at the heart of the 2024 Supreme Court dispute and the 2026 amendment.
Section 9D is Parliament exercising its Entry 54/Entry 50 power to impose limitations on how far states can go in taxing mineral rights, directly narrowing the space the 2024 Supreme Court judgment had opened up for states.
Mineral Area Development Authority v. Steel Authority of India (2024)
In July 2024, a nine-judge Constitution Bench of the Supreme Court held, by an 8:1 majority, that royalty payable under the MMDR Act is not a "tax" but a contractual payment arising from the mining lease. The judgment overruled the earlier seven-judge bench ruling in India Cement Ltd. v. State of Tamil Nadu (1990), which had held that royalty was a tax and that states lacked the competence to impose additional taxes on mineral rights.
Key Details
- The 2024 majority held that state legislatures retain the power under Entry 50 of the State List to tax mineral rights, and that this power is not automatically excluded by the Centre's collection of royalty under the MMDR Act.
- Justice B.V. Nagarathna dissented, holding that royalty is in the nature of a tax/exaction and not merely a contractual payment.
- The judgment reaffirmed states' fiscal autonomy over mineral taxation, prompting several mineral-rich states to raise fresh or retrospective tax and cess demands on mining companies.
The 2024 ruling is precisely what created the "problem" the 2026 amendment addresses — Parliament is now using its Entry 54 legislative power to cap the practical effect of the states' Entry 50 taxation rights that the Court affirmed, particularly regarding retrospective claims.
Cooperative and Fiscal Federalism Concerns
Cooperative federalism refers to a governance model where the Centre and states collaborate as relatively equal partners on shared policy domains, as opposed to a strictly hierarchical Centre-dominant model. Fiscal federalism specifically concerns the division of taxation powers and revenue between different levels of government.
Key Details
- Mineral-rich states such as Odisha, Jharkhand, and Chhattisgarh derive a significant share of state revenue from mining-related levies and have argued that Section 9D curtails their fiscal autonomy guaranteed under the scheme of the Seventh Schedule.
- The retrospective invalidation of unpaid state mineral-tax dues (reportedly cumulating to over ₹1.5 lakh crore in demands nationally) removes a revenue stream states had begun to claim after the 2024 judgment.
- The debate parallels earlier Centre-state fiscal disputes such as those over GST compensation cess and Finance Commission devolution formulas, where states argue Union-level uniformity comes at the cost of state fiscal space.
The amendment illustrates the recurring constitutional tension between the Centre's interest in a uniform, predictable national investment climate for mining and states' interest in maximising revenue from resources located within their territory.
- Parent Act: Mines and Minerals (Development and Regulation) Act, 1957.
- New provision inserted: Section 9D — restricts state taxes/cess/levies on mineral rights and mineral-bearing land.
- Key Supreme Court ruling: Mineral Area Development Authority v. Steel Authority of India (2024), 9-judge bench, 8:1 majority — royalty is not a tax.
- Overruled precedent: India Cement Ltd. v. State of Tamil Nadu (1990), 7-judge bench.
- Constitutional basis: Entry 54 (Union List) and Entry 23 (State List) for regulation; Entry 50 (State List) for state taxation of mineral rights — all under Article 246, Seventh Schedule.
- Retrospective state mineral-tax demands reported nationally: exceeding ₹1.5 lakh crore, now to be treated as invalid if not already recovered.
- Bill status: passed by both Houses of Parliament; awaiting Presidential assent.