The Government on Monday introduced the Mines and Minerals (Development and Regulation) Amendment Bill (MMDR Bill) in Lok Sabha, which proposes to put conditions on state government with respect to taxing mineral rights or mineral bearing lands.
The Bill seeks to amend the MMDR Act, 1957 in a bid to facilitate better and faster mineral exploration and production, especially critical minerals.
The government in the bill’s statement of object and reason said the bill proposes that the Union will take under its control the regulation of mineral bearing lands having the mineral contents in accordance with the parameters prescribed by the Central Government under the MMDR Act.
This is in addition to the existing provision which declares the Union’s control over the regulation of mines and the development of minerals, it added.
The bill also proposes inserting a new section (9D) in the MMDR Act which provides that no tax, cess or such other levy (by whatever name called) shall be imposed by the State Government on mineral rights; or mineral bearing lands, either based on mineral quantity, mineral value, royalty or otherwise, except in accordance with such conditions or restrictions as may be prescribed by the Central Government.
“It further seeks to provide that any such tax, cess or other levy which is not deposited with the State Government or recovered by it before the commencement of the MMDR Amendment Act, 2026, shall be deemed to be invalid at all material times,” it proposed.
However, any such tax, cess or other levy on mineral rights or on mineral bearing lands, already deposited with the State Government or recovered by it before such commencement, shall not be liable to be refunded, the Centre said.
The amendments strive to provide certainty, stability and predictability in the fiscal regime in the mineral sector, thereby giving impetus to national economic growth which would facilitate the aims of Atmanirbhar Bharat and ultimately attaining the vision of Viksit Bharat 2047, the Centre emphasised.
Minerals constitute an important natural resource which are of great geopolitical importance and are critical to infrastructure (including digital infrastructure), manufacturing, energy security, and the overall economic development of the country.
Sustainable and uniform development of minerals across the country is an important pillar to subserve the public interest. Hence, in view of the larger public interest, the Union has taken under its control the regulation of mines and the development of minerals under section 2 of the Mines and Minerals (Development and Regulation) Act, 1957 (the MMDR Act), the Centre noted.
“Mineral resources are finite and concentrated in a few States, and their extraction and management have to be guided by long-term national goals of sustainable, equitable and uniform development integrated into the overall strategy of the country’s economic development. Any regional disparity in fiscal impositions on minerals impacts public interest,” it pointed out.
Unbalanced imposition of steep taxes and levies will prompt the industry to completely bypass local supply lines, leading to sub-optimal development of markets, increased transportation costs and the resultant pollution load. There is also a risk of an increase in imports of minerals despite having sufficient local mineral resources as domestic mineral supply becomes expensive, it explained.
The Centre pointed out that uneven imposition of taxes or other levies on mineral rights and mineral bearing lands by the States in absence of reasonable limitations resulted in issues, such as heavy tax burden; unpredictable introduction of tax, cess and other levies, even after commencement of mining operations; multiple taxes, cess and other levies on production or dispatch of minerals and non-uniformity of rates of tax and other levies among States.
Excessive fiscal burden makes mining operations commercially unviable, discourages mineral extraction, adversely affects mineral production and in some cases, leads to closure of mines.
Any additional and unpredictable costs disproportionately may lead to adverse impact on small and medium-scale mining operators. Multiple and inconsistent taxes hamper development of the mineral industry and slow down economic growth resulting in cascading tax effect and high compliance costs.
An excessive tax burden at the extraction stage or otherwise may ultimately increase the cost of goods and services and, consequently, the cost of living for the common citizen in the country. Further, any retrospective imposition of taxes would cause legal uncertainty and erode investors’ trust, the Centre said.
Any fiscal burden imposed on mineral extraction should be guided by a uniform and balanced fiscal framework across the country. The cumulative incidence of different levies should not become disproportionate to the economic value and profitability of the mining operations. There is also a need to ensure certainty, stability and predictability of the fiscal regime applicable to mining.
The State has the power, coupled with the duty as a trustee of natural resources of the nation, to advance the national interest, inter alia, by ensuring harmonised mineral development (and consequent economic development) across the nation, rather than creating localised pockets of mineral resource driven growth, the Centre stressed.
Published on August 10, 2026
