Mines and Minerals (Development and Regulation) Amendment Bill, 2026

Context

• Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which seeks to restrict certain State taxes, cesses and other levies on mineral rights and mineral-bearing land.

Major Provisions

1. The Bill prohibits States from imposing specified levies on mineral rights or mineral-bearing land, except in accordance with conditions or restrictions prescribed by the Central Government.
2. The restriction covers levies based on the quantity or value of minerals, royalty or other related measures.
3. It empowers the Centre to regulate mineral-bearing land, defined according to parameters to be prescribed by the Central Government.
4. Specified unpaid or unrecovered dues arising from earlier State levies would become invalid. Amounts already recovered or deposited would not be refunded.
5. The Centre has justified the changes on the grounds that multiple and non-uniform levies can increase mining costs, create uncertainty and affect the viability of mineral extraction.

Constitutional Framework

1. The MMDR Act, 1957 is the principal Central legislation governing the development and regulation of mines and minerals.
2. Entry 54 of the Union List enables Parliament to regulate mines and mineral development when it declares such regulation necessary in the public interest.
3. Entry 50 of the State List empowers States to tax mineral rights, subject to limitations imposed by Parliament through a law relating to mineral development.
4. Entry 49 of the State List separately covers taxation of lands and buildings.

Supreme Court’s 2024 Ruling

1. In Mineral Area Development Authority v. Steel Authority of India Ltd. (2024), a nine-judge Constitution Bench held that royalty is not a tax.
2. The Court affirmed that States possess the power to tax mineral rights under Entry 50.
3. It also held that mineral-bearing land falls within Entry 49, allowing States to tax such land even when mineral production or royalty is used as the basis for determining the tax.
4. The judgment overturned the earlier position in India Cement Ltd. v. State of Tamil Nadu (1989), which had treated royalty as a tax.
5. Crucially, the Court held that Parliament’s power to impose limitations under Entry 50 does not extend to the States’ separate power to tax land under Entry 49.

Key Constitutional Issues

1. Legislative Competence

1. The Bill seeks to restrict State taxation of mineral-bearing land, even though taxation of land falls under Entry 49 of the State List.
2. This creates a constitutional question because Parliament’s specific power under Entry 50 concerns taxation of mineral rights, while Entry 49 deals with taxation of land.
3. The Supreme Court’s 2024 interpretation could therefore become important in assessing the validity of these provisions.

2. Retrospective Effect

• The proposed invalidation of certain past unpaid dues raises questions about the effect of legislation on liabilities arising from the legal position recognised by the Supreme Court in 2024.
• The distinction between dues that have already been recovered and those that remain unpaid may also invite scrutiny under Article 14, which guarantees equality before law.

3. Delegation of Powers

1. The Bill gives the Central Government significant authority to determine the conditions and restrictions governing State levies.
2. This may raise concerns about excessive delegation if important legislative policy choices are left to the executive without adequate statutory guidance.

4. Centre–State Perspectives

1. The Centre maintains that varying State-level charges can result in multiple levies, higher production costs and uncertainty for mining operations.
2. States have a competing interest in retaining their ability to raise revenue from natural resources located within their territories.
3. The issue therefore extends beyond mining policy to the broader constitutional question of resource distribution and fiscal federalism.

Way Forward

1. Frame detailed rules through institutionalised Centre–State consultation.
2. Clearly distinguish between mineral-right taxation and land taxation while implementing the new framework.
3. Provide adequate legislative standards and safeguards for powers delegated to the executive.
4. Ensure retrospective provisions remain consistent with constitutional principles and judicial decisions.
5. Balance investment certainty with the legitimate fiscal interests of resource-producing States.

Conclusion

The MMDR Amendment Bill, 2026 seeks to bring greater consistency to mineral-related taxation while raising important constitutional questions.

The central issue is the distinction between taxation of mineral rights under Entry 50 and taxation of land under Entry 49. Its successful implementation will require constitutional clarity, clear legislative safeguards and meaningful Centre–State consultation to balance mining-sector efficiency with fiscal federalism.

FAQs

1. What is the main objective of the MMDR Amendment Bill, 2026?

The Bill seeks to restrict specified State levies on mineral rights and mineral-bearing land and create a more uniform framework for mineral-related taxation.

2. What did the Supreme Court decide about royalty in 2024?

The Supreme Court held that royalty is not a tax. It also recognised the States’ constitutional power to tax mineral rights under Entry 50 of the State List.

3. What is the difference between Entry 49 and Entry 50?

Entry 49 concerns State taxation of lands and buildings, while Entry 50 deals with taxation of mineral rights, subject to limitations imposed by Parliament.

4. Why is mineral-bearing land important in this debate?

The 2024 judgment treated mineral-bearing land as land under Entry 49. Therefore, Parliament’s power to restrict State taxation under Entry 50 does not automatically cover taxation of such land.

5. What is excessive delegation?

Excessive delegation occurs when Parliament transfers essential policy-making powers to the executive without providing sufficient principles or safeguards to guide their exercise.

6. Why does the Bill matter for fiscal federalism?

It affects the balance between Union regulatory powers and State taxation authority over mineral resources, making it an important issue of India’s federal structure.

7. What is the principal challenge in implementing the Bill?

The key challenge is to provide a predictable framework for mineral development while respecting constitutional limits on State taxation and the revenue interests of resource-producing States.

Conclusion

The MMDR Amendment Bill, 2026 seeks to bring greater consistency to mineral-related taxation while raising important constitutional questions. The central issue is the distinction between taxation of mineral rights under Entry 50 and taxation of land under Entry 49. Its successful implementation will require constitutional clarity, clear legislative safeguards and meaningful Centre–State consultation to balance mining-sector efficiency with fiscal federalism.