"MMDR Amendment Act 2026 Caps State Levies on Mineral Rights"
Section 9D (MMDR Act)
new provision prohibiting State levies on mineral rights/lands except as centrally prescribed
Entry 50, List II
Seventh Schedule entry giving States power to tax mineral rights, subject to parliamentary limits
Mining in India is governed by the Mines and Minerals (Development and Regulation) Act, 1957 — a central statute that has been periodically amended to reflect evolving economic priorities. The Act distributes regulatory authority between the Centre and States: the Centre sets the overarching framework, including royalty rates and auction conditions, while States administer leases and collect revenues within that framework. This division has historically created tension, because mineral wealth is geographically concentrated in a handful of States — principally Jharkhand, Odisha, Chhattisgarh, and Rajasthan — yet the downstream industries that consume these minerals are spread across the national economy.
Significant reforms were introduced through the MMDR Amendment Act, 2015, which replaced discretionary lease grants with a mandatory auction-based regime, and through subsequent amendments that created the District Mineral Foundation (DMF) — a trust fund to channel a share of mining revenues toward communities in mining-affected areas. The MMDR Amendment Act, 2021 further opened commercial coal mining to private players and introduced composite licences to reduce project timelines. Each of these reforms sought to balance revenue maximisation, investment attraction, and community welfare. The MMDR Amendment Act, 2026 now addresses a dimension that earlier reforms left largely untouched: the proliferation of State-level taxes, cesses, and fees layered on top of the central royalty framework.
The constitutional backdrop is significant. The Supreme Court's nine-judge bench ruling in Mineral Area Development Authority v. Steel Authority of India (2024) held that States have the legislative competence to levy taxes on mineral rights and mineral-bearing lands under Entry 50 of List II of the Seventh Schedule, subject to any limitations imposed by Parliament under Entry 54 of List I. The 2026 Amendment directly exercises that parliamentary power to impose such limitations — making it a statutory response to the constitutional space the Supreme Court's ruling had confirmed.
The centrepiece of the MMDR Amendment Act, 2026 is the insertion of new Section 9D, which prohibits State Governments from imposing any tax, cess, or levy — by whatever name called — on mineral rights or mineral-bearing lands, except under conditions or restrictions prescribed by the Central Government. The prohibition is comprehensive: it covers levies based on mineral quantity, mineral value, royalty, or any other basis. This effectively converts what was previously an open-ended State power (subject only to parliamentary limitation) into a permission-based regime where the Centre prescribes the conditions within which States may act.
A critical provision governs past levies: any levy not yet paid or collected before the amendment's commencement is treated as invalid and uncollectable. However, amounts already deposited or recovered before commencement are not refundable. This prospective-cum-retrospective design attempts to prevent a fresh wave of litigation over pending demands while protecting State revenues already realised — a calibrated political and legal choice.
The rule-making power under Section 13 is correspondingly expanded, empowering the Central Government to prescribe the conditions or restrictions within which States may impose any residual levies. …
Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
1.Share of agriculture in GDP increased enormously.
2.Share of India's exports in world trade increased.
3.FDI inflows increased.
4.India's foreign exchange reserves increased enormously.
Select the correct answer using the codes given below:
With reference to the Indian economy after the 1991 economic liberalization, consider the following statements:
1.Worker productivity (₹ per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
2.The percentage share of rural areas in the workforce steadily increased.
3.In rural areas, the growth in non-farm economy increased.
4.The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
With reference to the MMDR Amendment Act, 2026, consider the following statements:
1.It inserts a new Section 9D that prohibits State Governments from levying any tax on mineral rights or mineral-bearing lands without conditions prescribed by the Central Government.
2.It treats all past levies on minerals — whether already collected or merely demanded — as invalid and refundable.
3.It expands the rule-making power of the Central Government under Section 13 of the MMDR Act, 1957.
Which of the statements given above is/are correct?
The constitutional basis for a State Government's power to levy taxes on mineral rights in India is:
Consider the following statements regarding the fiscal burden on the mining sector in India before the MMDR Amendment Act, 2026:
1.States imposed approximately 14 distinct taxes, charges, and fees on a single mining operation.
2.Some States had levied taxes on mineral-bearing lands at rates as high as 20 percent.
3.Royalty payments to States were abolished by the MMDR Amendment Act, 2015 and replaced entirely by auction premiums.
Which of the statements given above is/are correct?
With reference to the District Mineral Foundation (DMF) in India, consider the following statements:
1.DMF was established under the MMDR Amendment Act, 2015.
2.DMF funds are contributed by mining lease holders in addition to royalty payments.
3.The MMDR Amendment Act, 2026 abolishes DMF contributions to reduce the overall levy burden on miners.
Which of the statements given above is/are correct?
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