The Mines and Minerals (Development and Regulation) Amendment Bill 2026 seeks to tighten federal control over mineral rights taxation, potentially easing the burden of retrospective liabilities following a recent Supreme Court ruling.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, would give the Centre a much tighter grip over how states tax mineral rights and mineral-bearing land, in a move that could blunt the retrospective liabilities stirred up by a Supreme Court ruling last year. Introduced by Union Mines Minister G Kishan Reddy, the Bill seeks to place mineral-bearing land within the Union’s regulatory framework and define it through parameters set by the central government.
At the heart of the proposal is a new Section 9D in the MMDR Act. It would bar state governments from imposing taxes, cesses or other levies on mineral rights or mineral-bearing land based on mineral quantity, value of output, royalty payable or similar measures unless those charges comply with conditions laid down by the Centre. The Bill would also amend Section 13 so the Union can frame the rules governing those limits.
The draft law goes further by effectively wiping out unpaid or unrecovered levies that states had sought before the amended law takes effect. Any tax, cess or similar charge on mineral rights or mineral-bearing land that has not been deposited with or recovered by a state would be treated as invalid from the outset. States, however, would not be required to refund sums already collected. Business Standard said the changes were framed against the backdrop of the Supreme Court’s July 25, 2024, ruling in Mineral Area Development Authority v Steel Authority of India, which held that royalty is not a tax and that states can tax mineral rights under Entry 50 of the State List.
That judgment overturned the court’s 1989 India Cement precedent and was followed by an August 14, 2024 order saying states could impose or renew mineral-rights and land taxes in line with the new ruling. The court said such demands could apply to transactions from April 1, 2005, while allowing companies to pay over 12 years from April 1, 2026 and waiving interest and penalties for the period before July 25, 2024. That framework alarmed miners and mineral users alike, particularly because state levies can be passed through in supply contracts.
A senior steel sector executive told Business Standard that the proposed changes could help not just miners but also steelmakers and other downstream buyers. He pointed to Odisha’s cess of nearly 12% of the average sale price and Jharkhand’s levy of about ₹450 a tonne for coal and ₹600 a tonne for iron ore. The pressure on costs is already visible: Coal India said in its first-quarter investor presentation that ₹1,246 crore of the ₹1,436 crore rise in other expenses in Q1FY27 came from higher rates and taxes.
Industry voices say the Bill would reduce uncertainty by centralising fiscal control and limiting state-by-state variation. Rajib Maitra, partner and sector leader at Deloitte South Asia, said it “insulates mining corporations and central public-sector undertakings from historical arrears in the form of state-specific taxes and levies”. Sidhartha Jain, tax partner at EY India, said the proposal appeared designed to address “fiscal burden, legacy liabilities, litigation, and uncertainty” after the Supreme Court’s ruling, by invalidating unrecovered past levies while protecting amounts already collected.
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