"MMDR Amendment 2026 Restricts State Mineral Taxation Powers"
Entry 50, State List
constitutional provision giving states power to tax mineral rights, subject to parliamentary limitations through mineral-development laws
Entry 54, Union List
constitutional provision giving Parliament power to regulate mines and mineral development of national importance
The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) is the foundational law governing mineral extraction in India. It divides regulatory authority between the Union and the states through the Seventh Schedule. Under Entry 54 of the Union List, Parliament regulates mines and mineral development of national importance. Under Entry 50 of the State List, states may tax mineral rights, though Parliament can place limitations on this power through laws relating to mineral development. States also hold an independent power to tax land and buildings under Entry 49 of the State List.
A key distinction runs through the MMDR Act: the Union controls major minerals such as coal, iron ore, and bauxite, while states retain authority over minor minerals such as sand and gravel under Section 15 of the MMDR Act. Importantly, states do retain the power to grant concessions and auction non-coal major mineral blocks, Statement 1 of the 2018 Prelims question that claimed otherwise was incorrect. This division of powers reflects a broader federal compromise: the Union sets the regulatory framework, but mineral-rich states were historically permitted to levy taxes and royalties on mineral-bearing land, giving them a meaningful share of the economic value generated from their own resources.
The MMDR Amendment Act, 2015 created District Mineral Foundations (DMFs), which channel a portion of mining revenues to communities affected by mining operations. The sole purpose of DMFs is protecting the interests of persons affected by mining, not promoting mineral exploration or authorising state licences, as the 2016 Prelims question confirmed. This reflects a recognition that host communities and states bear real costs from extraction. The 2024 nine-judge bench ruling in Mineral Area Development Authority v. Steel Authority of India reinforced states' fiscal position by holding that royalty is not a tax and that states have an independent constitutional right to tax mineral-bearing land. The MMDR Amendment Act, 2026 now directly challenges this settled position.
The constitutional architecture of mineral taxation involves three overlapping layers. First, the Union collects royalties on major minerals and sets royalty rates. Second, states may levy their own taxes on mineral rights under Entry 50, subject to parliamentary limitations. Third, states may tax mineral-bearing land as land under Entry 49, a power the Supreme Court confirmed in 2024 is independent of Entry 50 and not subject to the same parliamentary override.
Section 9D of the MMDR Amendment Act, 2026 restricts state governments from imposing any tax, cess, or levy on mineral rights or mineral-bearing land except in accordance with conditions prescribed by the Central government. The Centre's stated rationale is creating a predictable investment environment. Mining projects involve large capital outlays over decades, and investors need stable fiscal rules. This is a legitimate concern. However, the amendment goes further than Entry 50 strictly permits. …
What is/are the purpose/purposes of 'District Mineral Foundations' in India?
1.Promoting mineral exploration activities in mineral-rich districts
2.Protecting the interests of the persons affected by mining operations
3.Authorizing State Governments to issue licences for mineral exploration
Select the correct answer using the code given below.
Consider the following statements:
Statement I: In India, State Governments have no power for making rules for grant of concessions in respect of extraction of minor minerals even though such minerals are located in their territories.
Statement II: In India, the Central Government has the power to notify minor minerals under the relevant law.
Which one of the following is correct in respect of the above statements?
Consider the following statements :
1.In India, State Governments do not have the power to auction non-coal mines.
2.Andhra Pradesh and Jharkhand do not have gold mines.
3.Rajasthan has iron ore mines.
Which of the statements given above is/are correct?
'While the national political parties in India favour centralisation, the regional parties are in favour of State autonomy.' Comment.
With reference to District Mineral Foundations (DMFs) in India, consider the following statements:
1.DMFs were established by the MMDR Amendment Act, 2015.
2.Their primary statutory purpose is to protect the interests of persons affected by mining operations.
3.DMFs are also authorised to promote mineral exploration activities in mineral-rich districts.
Which of the statements given above is/are correct?
Consider the following statements regarding the constitutional framework for mineral taxation in India:
1.Entry 50 of the State List empowers states to tax mineral rights, subject to limitations Parliament may impose through laws relating to mineral development.
2.Entry 49 of the State List, which covers taxation of land and buildings, is subject to the same parliamentary override as Entry 50.
3.The Supreme Court held in 2024 that royalty payable on minerals is not a tax.
4.Section 15 of the MMDR Act, 1957 vests authority over minor minerals in state governments.
How many of the above statements are correct?
Consider the following statements regarding State Governments' powers over minerals in India:
1.State Governments have the power to make rules for grant of concessions for extraction of minor minerals located in their territories.
2.The Central Government has the power to notify what constitutes a minor mineral under the MMDR Act.
3.State Governments do not have the power to auction non-coal major mineral blocks.
Which of the statements given above is/are correct?
Consider the following pairs:
Mineral governance provision — Correct description
1.Entry 54, Union List — Regulation of mines and mineral development of national importance
2.Entry 50, State List — Taxation of mineral rights, subject to parliamentary limitations
3.Entry 49, State List — Taxation of land and buildings, independent of Entry 50
4.Section 15, MMDR Act — Grants states authority over major minerals
How many of the above pairs are correctly matched?
Which of the following best describes the constitutional significance of the Supreme Court's 2024 ruling in Mineral Area Development Authority v. Steel Authority of India?
Want the full note, Prelims Facts & MCQ answers?
Create a free account — takes less than a minute.
Create free account