The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 was passed by Parliament on 13 August 2026, “in order to bring about certainty, stability and predictability into India’s mineral taxation regime.” The Bill, introduced by Shri G. Kishan Reddy, the Minister of Coal and Mines, amends the Mines and Minerals (Development and Regulation) Act, 1957 (the “MMDR Act”), albeit in apparently technical terms, but in actuality recalibrates the balance between the Union and State Governments in relation to one of the most contentious natural resources in the country: subsoil minerals. The Amendment can be seen as the formal legislative reaction of the Union Government to the important nine-judge decision of the Supreme Court in Mineral Area Development Authority v. Steel Authority of India (2024), which recognized the extensive tax power of the States in respect of mineral rights and mineral-bearing land. The following discussion attempts to examine the key provisions of the Amendment of 2026, the constitutional issues raised thereby and the larger political-economic ramifications.

The Statutory and Constitutional Backdrop

The importance of the above Amendment can only be understood when mining is viewed in the context of the federal scheme of governance in India. “Entry 54 of the Union List gives Parliament power to make laws concerning mines and mineral development “to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.” Entry 23 of the State List grants powers of residual regulation to the states in relation to matters not governed by the laws of the Union, while Entry 50 of the State List gives states powers to tax mineral rights “subject to any limitations imposed by Parliament by law relating to mineral development.” Additionally, Entry 18 (land) and Entry 49 (taxes on lands and buildings) of the State List confer on States plenary competence over land, including mineral-bearing land.

The MMDR Act, 1957, is Parliament’s principal legislation on the subject. It distinguishes between “major” minerals (regulated centrally) and “minor” minerals (regulated by States), vests States with the power to grant mineral concessions, and empowers the Centre to fix royalty rates and prescribe auction procedures.

The fiscal framework for this system had been governed by the interpretation of India Cement Ltd. v. State of Tamil Nadu (1989), where the seven-judge bench referred to royalty as a “tax”, thereby reducing the fiscal power of the States. This interpretation was set aside in July 2024 in Mineral Area Development Authority v. Steel Authority of India by the nine-judge bench (8:1) in which it was declared that: (i) royalty is contractual in nature rather than being a tax; (ii) States have legislative power to impose taxes on mineral rights under Entry 50; (iii) Parliament may impose “any limitations” including an outright prohibition on such State taxation, but the MMDR Act, 1957, had not in fact imposed any; and (iv) most importantly, taxing power of States over mineral-bearing lands under Entry 49 is beyond the limiting power of Parliament based on Entry 50. The Court refused to make the ruling prospective in order to allow tax demand backdated to 1 April 2005 with staggered payment provisions.

It was against this backdrop of a resurgent State fiscal claim, with Odisha, Jharkhand, Rajasthan, and other mineral-rich States poised to recover thousands of crores in past dues, that the Union moved the 2026 Amendment.

Key Features of the 2026 Amendment

The Amendment is a surgical intervention centred on three related changes.

First, the MMDR Act is amended to include “mineral bearing lands” alongside “mines” and “mineral development” within the Union’s declared regulatory jurisdiction under Section 2. Under a new clause 3(ada), the definition of “mineral bearing land” is stated as “land wherein mineral content meets the criteria set out by the Central Government.” The extension of regulatory control in this manner, as pointed out by commentators, comes to regulate an area, which was held by the Supreme Court to be outside the ambit of the Union and an exercise of State taxing power.

Secondly, a new Section 9D prohibits the levying of “any tax, cess or such other levy (by whatever name called)” on mineral rights or mineral bearing lands on the basis of mineral quantity, mineral value, royalty payable or otherwise, by any State Government save on fulfillment of the terms and conditions or restrictions set by the Central Government. Sub-section 2 carries a clause non obstante providing that notwithstanding any other law, judgment or decree, “such levy, which has not been deposited or recovered prior to the commencement of the Amendment shall be deemed to be invalid at all material times.” But nothing contained in the provision makes the amount collected refundable.

Third, Section 13 is amended to empower the Central Government to make rules prescribing the conditions or restrictions subject to which States may impose such levies.

Beside all of this financial assistance, the Amendment also abolishes the ceiling of 50% on the sale of minerals from captive mines, dispenses with the additional payment that was necessary in the case of adding critical, strategic, or deep-seated minerals (such as lithium, cobalt, nickel, and graphite) to existing leases, allows an increase of up to 10% of area in the case of mining leases and 30% in the case of composite leases, and expands the National Mineral Exploration Trust Fund into the National Mineral Exploration and Development Trust Fund. A new regulator for mineral exchanges is also envisaged.

The Constitutional Issues

The Amendment squarely joins the issue with the Supreme Court’s 2024 ruling, and at least four constitutional concerns merit close attention.

(i) Competence to legislate on “mineral bearing land.” The extension of legislative jurisdiction of the Union to the field of “mineral bearing lands” constitutes an infringement of the domain specifically left to the States by the Supreme Court. As per MADA, “State legislatures have legislative competence under Article 246 read with Entry 49 of List II to tax lands which comprise of mines and quarries,” and the restrictions contained in Entry 50 “do not operate on Entry 49 of List II because there is no specific stipulation under the Constitution to that effect.” Entry 54 in the Union List is merely a power to regulate in respect of “mines and mineral development” and is certainly not the power to tax. “Mineral bearing lands” does not constitute part of the Union List Entry, which may be said to come within the purview of a State subject. By defining “mineral bearing land” and asserting Union control over it, the Amendment may well be traversing a State-list subject, and thus risks being struck down for want of legislative competence.

(ii) Retrospective invalidation and legislative overruling of a judicial decision. Section Section 9D(2) automatically voids all unrecovered state taxes in respect of mineral rights or mineral bearing lands. This is in direct conflict with the guidelines laid down in the Mines and Minerals (Development and Regulation) Act (MADA) which allowed states to collect their dues from 1st April 2005 onwards. According to the Supreme Court of India in the case of S.R. Bhagwat v. State of Mysore (1996) and previous cases such as the Cauvery Water Disputes Tribunal, In re (1993), it has been firmly established that while the Parliament may change the underlying law of a judgment retroactively, it cannot make a judgment ineffective simply by making it invalid. A retrospective legislative override that does not remove the legal foundation of the judgment, but merely nullifies its consequences, would be classified as an impermissible encroachment on the judicial function.

(iii) Article 14 and disparate treatment: The Amendment favors tax defaulter miners by declaring all unpaid amounts invalid while not allowing any refund of those amounts that have been paid already, hence treating similarly-situated lessees(compliant taxpayers) arbitrarily. There is no rational basis for differential treatment of these mining lessees since the Amendment does not contain an intelligible principle which can justify this difference.

(iv) Excessive delegation. Section 9D delegates the entire issue of “conditions or restrictions” to State taxation to the executive branch of government through the rules set out in Section 13, which do not include any parameters, limits or principles provided for by the Parliament. Under In re Delhi Laws Act, 1912 (1951), essential legislative policies need to be laid down by the legislature itself. A statutory scheme that bars States from taxing mineral rights but declines to specify how or on what basis such taxation may be permitted thereby delegating this determination wholesale to the executive, may fail this test.

Federalism and the Political Economy of Extractivism

Apart from the doctrinal concerns raised by the Amendment, there is also a unique political-economic angle to be considered. As noted by scholars, the enactment of the law in a non-deliberative manner as one of the eleven Bills passed during the monsoon session shows a trend towards a reduction in the State’s financial independence and the channelization of its surplus revenues away from mineral-rich States controlled by the opposition like Jharkhand, Odisha, and Chhattisgarh to private companies involved in mining activities. The abolition of the cap on the sale of captive mines, the unregulated inclusion of critical minerals under existing leases in a period of intense competition for lithium, cobalt, and rare earths, and the ability to increase the size of the lease without conducting a new auction represent a significant transfer of value to incumbent lessees. The Jharkhand Chief Minister has termed the legislation a “black Bill,” and similar objections have emerged from Kerala and Odisha.

Conclusion

The MMDR Amendment Act, 2026 is more than just a technical move. It is a legislative response to a judicial ruling, a rethinking of the Centre–State financial equation, and a pointer to where India’s future lies in its approach to minerals that is Centre-oriented and pro-business in nature in line with the new era of critical minerals. The stated objectives of this legislation viz, uniformity, predictability, and investor confidence, are undisputed in general terms. However, how these objectives are sought through asserting union supremacy in the land domain, nullifying State taxes retrospectively, handing down the power of prescribing tax thresholds to the executive, and treating some taxpayers differently from others raise doubts on how well these measures conform to the constitution and the latest rulings of the Supreme Court. What will become of this amendment in the light of constitutional challenges it will face will determine more than just India’s fiscal fortunes with regard to its mineral States.