MMDR Amendment Act, 2026: Why States Are Divided Over Limits on Mineral Taxes
Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2026. It received the President's assent on 17 August 2026.
The Act widens the Centre's control from "mines and mineral development" to also cover mineral-bearing lands.
A new Section 9D bars states from imposing any new tax, cess or levy on mineral rights or mineral-bearing lands, except under conditions set by the Central Government.
It also treats as invalid any such state tax that had not yet been collected when the Act came into force. Amounts already collected do not have to be refunded.
The Centre's reasoning: many different state taxes raise the cost of Indian minerals, push industries towards imports and add to the burden on the national treasury.
States have reacted differently. Mineral receipts form about 80% of non-tax revenue in Jharkhand and Odisha, 48% in Karnataka, 41% in Madhya Pradesh, 39% in Rajasthan, 11% in Telangana and 6% in Chhattisgarh. Karnataka, Telangana, Himachal Pradesh and Kerala have moved or planned to move the Supreme Court; Jharkhand has raised objections. Other mineral-rich states such as Madhya Pradesh, Rajasthan and Chhattisgarh have not challenged the law so far.
Mines and Minerals (Development and Regulation) Act, 1957
The Mines and Minerals (Development and Regulation) Act, 1957, or MMDR Act, is India's main law on mining. It sets the rules for who can search for minerals, who can mine them, for how long, how mining rights are given, and what payments miners must make to the government. Most mining rights are actually given by state governments, but they must follow the rules of this central law. Think of it as the national rulebook that every state referee must follow.
The 2026 amendment uses the Centre's Entry 54 power, expressed through the MMDR Act, to limit what states can tax. Because the MMDR Act already controls royalty rates, adding control over mineral-bearing lands and state levies means states that depend heavily on minerals lose a source of revenue they had just won in court.
Mineral Area Development Authority v. Steel Authority of India (2024)
Mineral Area Development Authority v. Steel Authority of India (often called the MADA case) is a 2024 judgment of a nine-judge Constitution Bench of the Supreme Court. It decided two big questions. First, is the royalty paid by miners a tax? The Court said no. Second, can states tax mineral rights and mineral-bearing land? The Court said yes, and Parliament's general mining law does not take away this power unless it says so clearly. The judgment was a major win for mineral-rich states.
The MMDR Amendment Act, 2026 directly answers the MADA judgment. It uses Parliament's power to limit state taxes on mineral rights, extends Union control to mineral-bearing land, and cancels the uncollected past dues that the Court had allowed states to recover from 2005. This is why mineral-dependent states see the law as a blow to fiscal federalism and some are challenging it in the Supreme Court.
- MMDR Amendment Act, 2026: President's assent on 17 August 2026
- New Section 9D: no state tax, cess or levy on mineral rights or mineral-bearing lands except under conditions set by the Centre
- Uncollected state mineral levies deemed invalid; already-collected amounts not refundable
- Constitutional entries: Entry 54 (List I), Entry 23, 49, 50 (List II)
- Mineral receipts as share of state non-tax revenue: Jharkhand and Odisha about 80% · Karnataka 48% · Madhya Pradesh 41% · Rajasthan 39% · Telangana 11% · Chhattisgarh 6%
- States moving the Supreme Court: Karnataka, Telangana, Himachal Pradesh, Kerala; Jharkhand has raised objections
- MADA judgment: 25 July 2024, 8:1; dues allowed from 1 April 2005 in 12 instalments from 1 April 2026