About the MMDR Act
- MMDR Act, 1957 is India’s main law for regulating mines and developing minerals, enacted by Parliament under Entry 54 of the Union List, giving the Centre power over mineral development in the public interest.
- The MMDR Amendment Act, 2026 added Section 9D, creating a uniform, Centre-directed system for taxing mineral rights and mineral-bearing lands.
Key Provisions of the 2026 Amendment
- Section 9D: Bars State Governments from levying fresh taxes, cesses or charges on mineral rights or mineral-bearing lands — by whatever name, and whether based on quantity, value or royalty — except under conditions prescribed by the Central Government.
- Past Levies: Levies not paid or collected before the amendment are declared invalid; amounts already deposited or recovered are not refundable.
- Section 13: Amended to empower the Central Government to frame rules prescribing the conditions under which States may impose such levies.
- Minor Minerals: Nearly 50 minor minerals (sand, gravel, clay, granite, marble, gypsum, laterite, etc.) remain entirely under State control and are unaffected.
Rationale Behind the Amendment
- Multiplicity of Levies: States currently impose around 14 taxes, charges and fees on mining — royalty, auction premium, dead rent, DMF payments, GST and transit fee — with some States taxing mineral-bearing lands at rates up to 20%.
- Fragmented Market: Widely differing State levies caused sharp regional price variation, obstructing supply chains and raising logistics costs.
- Import Dependence: India imported minerals worth ₹10,12,529 crore in FY 2025-26 as high domestic levies pushed user industries like steel toward foreign sourcing.
- Investment Deterrence: Unpredictable and retrospective tax demands discouraged long-term capital commitment in mining.
Impact on State Revenue
- Mineral revenue to States has risen 354% since 2014; States have received over ₹7 lakh crore (including coal).
- ~90% of mining-sector revenue now accrues to States (₹1,14,549.28 crore in 2025-26); the Act does not alter this share.
- Coal Sector: States’ share rose from 55.6% (2014-15) to 89.5% (2025-26).
Conclusion
The MMDR Act, 1957, as amended by the 2026 Amendment Act, introduces Section 9D to cap State powers to tax mineral rights and mineral-bearing lands, bringing predictability and uniformity to mineral taxation while leaving States’ auction-based revenue share and control over minor minerals unchanged.
| This concept has been elaborately discussed in the following article — Centre Curbs States’ Power to Tax Minerals |