MMDR Amendment Act 2026 Gets Assent, Bars State Mineral Levies

Aug 17, 2026 Legislative & Policy MMDR Act 1957 Section 9D Entry 50 List II mineral rights taxation
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The President of India assented on 17 August 2026 to the Mines and Minerals (Development and Regulation) Amendment Act, 2026, inserting a new Section 9D into the MMDR Act, 1957 that bars State Governments from imposing any tax, cess or other levy on mineral rights or mineral bearing lands except on terms prescribed by the Central Government. The measure, piloted by the Ministry of Mines, unwinds the fiscal consequences of the Supreme Court of India's nine-judge decision of July 2024.

What the Act does

The amending Act, introduced in the Lok Sabha as Bill No. 154 of 2026 on 10 August 2026, runs to five operative clauses.

  1. Section 2 of the MMDR Act, 1957 — the declaration by which the Union takes under its control the "regulation of mines" — is widened by the insertion of the words "and mineral bearing lands". The Union's Entry 54, List I declaration therefore now extends beyond mines and mineral development to the land itself.
  2. Section 3 gains a new clause (ada) defining "mineral bearing land" as any land having mineral contents in accordance with the parameters prescribed under Section 5(2)(a).
  3. A new Section 9D is inserted after Section 9C. Sub-section (1) provides that no tax, cess or other levy, by whatever name called, shall be imposed by a State Government on (a) mineral rights, or (b) mineral bearing lands — whether based on mineral quantity, mineral value, royalty payable "or otherwise" — except in accordance with conditions or restrictions prescribed by the Central Government.
  4. Section 9D(2) carries a double non obstante clause. Notwithstanding anything in any other law "or in any judgment, decree or order of any court", any such State levy that is not deposited with or recovered by the State Government before the commencement of the 2026 Act "shall be deemed to be invalid at all material times". The proviso protects amounts already deposited or recovered from any claim to refund.
  5. Section 13(2) gains a new clause (ta), empowering the Central Government to make rules prescribing the conditions or restrictions contemplated by Section 9D(1).

Clause 1(2) makes commencement dependent on a notification in the Official Gazette by the Central Government.

The judgment it responds to

On 25 July 2024 a nine-judge Bench of the Supreme Court decided Mineral Area Development Authority v. Steel Authority of India, 2024 INSC 554, by an 8:1 majority. The Court held that royalty payable under Section 9 of the MMDR Act, 1957 is not in the nature of a tax, overruled the seven-judge decision in India Cement Ltd. v. State of Tamil Nadu, and affirmed that Entry 50 of List II confers on State legislatures the competence to tax mineral rights. Justice B.V. Nagarathna dissented.

Entry 50 is, however, expressly qualified: it confers the power to tax mineral rights "subject to any limitations imposed by Parliament by law relating to mineral development". On 14 August 2024 the same Bench addressed the temporal reach of its ruling, permitting States to recover past dues on transactions from 1 April 2005 onwards, waiving interest and penalty referable to the period before 25 July 2024, and directing that the demands be paid in staggered instalments over twelve years commencing 1 April 2026.

The 2026 Act intersects with that timetable directly. The twelve-year recovery window opened on 1 April 2026; Section 9D(2) invalidates, at all material times, every rupee of that liability which remains undeposited and unrecovered at commencement.

The constitutional questions it leaves open

Two distinct issues arise, and they are not equally difficult.

Section 9D(1) is the easier half. Entry 50 of List II is a conditional entry, and Parliament's power to impose limitations on State taxation of mineral rights through a law relating to mineral development is written into its text. A prospective bar on State levies on mineral rights, subject to conditions the Centre may prescribe, is a textbook exercise of that carve-out — and Mineral Area Development Authority itself acknowledged the limitation power while holding that Parliament cannot itself tax mineral rights under Entry 54 of List I.

The extension to "mineral bearing lands" is harder. Taxes on lands and buildings fall under Entry 49 of List II, which carries no comparable "subject to Parliament" qualification. To the extent Section 9D operates on a State levy that is in substance a tax on land rather than on mineral rights, the Entry 50 carve-out does not supply the authority, and the Union must instead rely on the widened Section 2 declaration under Entry 54, List I — an entry the Supreme Court has characterised as regulatory rather than fiscal.

Section 9D(2) is harder still. Indian constitutional doctrine permits a legislature to enact validating legislation that removes the basis on which a judgment proceeded, but not to declare a judicial decision ineffective by legislative fiat. A provision that deems liabilities invalid "notwithstanding … any judgment, decree or order of any court" invites exactly that characterisation, particularly where the liabilities in question were the subject of a nine-judge determination and a calibrated recovery schedule. Whether the retroactive limb survives will depend on whether courts read it as altering the legal foundation prospectively-with-retroactive-effect, or as nullifying the decree itself.

Implications for practitioners

Mining lessees with State demand notices should not treat those demands as extinguished on 17 August 2026. Assent is not commencement, and Section 9D(2) draws its line at amounts deposited or recovered before the commencement date. Until the Gazette notification issues, the operative question for every disputed demand is whether it will have been recovered by that date — which gives States an incentive to accelerate recovery and lessees a corresponding incentive to resist it.

State revenue departments will need to audit outstanding mineral-levy demands against the recovered/unrecovered line, since the proviso protects only what is already in the treasury. And industry should expect the Central rules under the new Section 13(2)(ta) to become the real battleground: until they are notified, Section 9D(1) admits of no prescribed exception at all.

Sources

Sources

Primary Source: Rashtrapati Bhavan — Central Bills assented to by the President
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