MMDR Amendment Act 2026: States' Mineral Levies Capped

What Parliament passed and why it matters

Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, tightening the rules on how states can impose levies linked to mineral rights and mineral-bearing lands. The law is positioned as an attempt to create a more uniform and predictable fiscal framework for mining across India. Its centrepiece is a new Section 9D that limits state-level taxes, cesses, and other levies on mineral rights and mineral-bearing lands unless permitted under conditions set by the Central Government. The amendment also changes the treatment of certain past dues, which has direct implications for companies facing historical state levy claims.

The move has become a focal point in the debate on fiscal federalism because it curtails states’ ability to create their own mineral-related levies. At the same time, a government fact sheet cited in the material says states will continue to receive the overwhelming share of mining revenue. Union Mines Minister G Kishan Reddy has said the amendment would not cause revenue loss for states, amid concerns about the impact on state finances.

Core change: restrictions on state levies

The amendment prohibits a state government from imposing specified levies on mineral rights or mineral-bearing lands except in accordance with conditions or restrictions prescribed by the Central Government. The restriction is broad and applies to any tax, cess, or other levy based on mineral quantity, mineral value, royalty, or any other basis. The text emphasises that the bar applies regardless of what the levy is called.

This restriction is framed as a uniform fiscal rule for the sector. It is designed to prevent a patchwork of state-level levies across mineral-bearing regions. The amendment also aims to protect mining companies from past tax liabilities by addressing how older, uncollected dues are treated.

New Section 9D: what it does

A key provision is the introduction of Section 9D into the MMDR Act. Section 9D states that no tax, cess, or other levy by whatever name called shall be imposed by a State Government on mineral rights or mineral-bearing lands. It covers levies computed on mineral quantity, mineral value, royalty payable, or otherwise.

However, the amendment leaves a narrow channel for such levies if they are imposed under conditions or restrictions prescribed by the Central Government. In effect, the Centre becomes the gatekeeper for any state levy that falls within the scope of mineral rights and mineral-bearing lands.

Treatment of past levies: invalid dues, no refunds

The amendment applies retrospectively in a specific way. Any levy not paid or collected by a state before the amendment comes into effect is deemed invalid. The text also states that any such levy not deposited with or recovered by a state before commencement shall be “deemed to be invalid at all material times.”

At the same time, amounts already deposited or recovered before the commencement of the amendment are protected from reversal and are not liable to be refunded. This creates a clear distinction between uncollected demands and amounts already collected.

Central rule-making power: what changes under Section 13

The Bill also amends Section 13 of the MMDR Act to empower the Central Government to make rules. This rule-making power supports the new framework where state levies in the covered categories are only possible within conditions and restrictions notified by the Centre.

The combination of Section 9D and the amended Section 13 signals a stronger central role in defining the boundaries of mineral-related taxation by states.

Scope and coverage: minerals and states mentioned

The amendment cleared by the Rajya Sabha on August 12, 2026 bars state governments from imposing tax, cess, or similar levies on mineral rights and mineral-bearing lands for a defined list of major minerals in eleven states, as referenced in the material. Union Minister G Kishan Reddy said on August 13 that the amendment covers only major minerals such as coal, lignite, iron ore, graphite, cobalt, lithium, and nickel.

The minister also said it applies to eleven states including Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and Goa. The material further notes that states retain absolute control over minor minerals.

Key provisions at a glance

Sector lens: cement companies and royalty-linked costs

The amendment has been described in the material as a positive development for the cement sector, particularly for The Ramco Cements and Dalmia Bharat. Both were cited as being hit by higher royalty costs in Tamil Nadu.

According to the text, Ramco Cements was among the worst affected, with royalty adding around ₹80 to ₹100 per tonne to its overall cost. Dalmia Cement faced an impact of around ₹40 per tonne. While the amendment text focuses on state levies and not corporate pricing, the stated cost impact highlights why cement producers track changes in mineral-related fiscal policy closely.

Market impact: what changes for companies and states

For mining and mineral-consuming companies, the biggest immediate impact described is reduced exposure to historical state levy demands that were not collected before the amendment’s commencement. The law explicitly invalidates unpaid or unrecovered dues from before the commencement date, while keeping already collected amounts intact.

For states, the law narrows the ability to create fresh taxes and cesses on mineral rights and mineral-bearing lands unless allowed under Centre-prescribed conditions. The material points to concerns about potential revenue loss, but also reports the Union Mines Minister’s position that the legislation would not result in revenue loss for states. A government fact sheet is also cited stating that states will continue to receive the overwhelming share of mining revenue.

For the broader system, the amendment centralises authority over the levy framework and has been described as neutralising a Supreme Court ruling on state taxing powers, without detailing the judgment itself.

Timeline and stated positions

Why the amendment is being framed as a “uniform fiscal framework”

The amendment is presented as an effort to standardise mineral taxation across states and provide a uniform, balanced fiscal framework for the mining sector. The mechanism used is not a new national tax rate in the text provided, but a prohibition on unilateral state levies on mineral rights and mineral-bearing lands unless the Centre prescribes conditions.

The design also draws a line between major and minor minerals. The minister’s statement that states retain absolute control over minor minerals suggests the change is targeted rather than universal across all mineral categories.

Conclusion

The MMDR Amendment Act, 2026 redraws the boundary on state taxation of mineral rights and mineral-bearing lands through a new Section 9D, while invalidating uncollected past state levies and keeping already recovered amounts non-refundable. With rule-making power strengthened under Section 13, the next operational detail to watch will be the conditions and restrictions prescribed by the Central Government that determine when, if at all, such state levies can be imposed.