India moves to amend MMDR Act to enhance fiscal certainty and drive mineral sector growth

• Bill proposes tighter central oversight of state mineral levies
• Govt seeks greater fiscal certainty and uniformity for miners

The Union government has introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 in the Lok Sabha, proposing tighter central oversight over taxation and levies on mineral rights and mineral-bearing lands. The Bill seeks to amend the Mines and Minerals (Development and Regulation) Act, 1957.

A key proposal is the insertion of a new Section 9D, under which state governments would not be permitted to impose any tax, cess or other levy on mineral rights or mineral-bearing lands, based on mineral quantity, mineral value, royalty payable or otherwise, except in accordance with conditions or restrictions prescribed by the Central government.

The Bill also proposes to bring “mineral bearing lands” under the Union’s control. Such land would be defined based on mineral content parameters prescribed by the Central government under the MMDR Act.

Importantly, the proposed legislation states that any such tax, cess or levy that has not been deposited with or recovered by the state government before the amendment comes into force would be deemed invalid. However, levies already deposited or recovered before commencement would not be refundable.

Government cites need for uniform fiscal regime

According to the Statement of Objects and Reasons, the government is seeking to address the impact of varying and unpredictable fiscal burdens across mineral-producing states. It notes that multiple taxes and levies, differences in rates between states and retrospective imposition of charges have increased costs and created uncertainty for mining operations.

The government has further stated that excessive fiscal burdens can make mining operations commercially unviable, discourage mineral extraction and, in some cases, result in mine closures. It also highlighted the potential for higher domestic mineral costs to encourage imports despite the availability of local resources.

The Bill proposes to empower the Central government to prescribe conditions or restrictions governing state-level taxes, cess and other levies on mineral rights and mineral-bearing lands through rules.

The government said the proposed amendments are aimed at providing certainty, stability and predictability in the mineral-sector fiscal regime, while supporting mineral development and broader economic growth.