Parliament Passes MMDR Amendment Bill Restricting Retrospective Mining Taxes by State Governments

NEW DELHI: Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, by voice vote, introducing statutory changes that alter the framework governing state-level taxation on mineral-bearing lands and mineral rights.

The legislation introduces Section 9D into the principal 1957 Act, explicitly establishing that state governments cannot independently impose cesses, surcharges, or taxes on mineral rights outside the statutory provisions framework regulated by the Central Government.

Invalidation of Pending Retrospective Mineral Taxes

A key provision of the newly passed amendment addresses long-standing litigation over retrospective state tax levies. Under the statutory terms, any pending or unrecovered tax dues and cesses previously imposed by state governments on mineral rights are rendered invalid.

"The amendment establishes a unified national framework for mineral taxation. Any unpaid statutory dues levied by states on mineral rights prior to this enactment shall not be enforceable, while levies already collected and deposited will remain non-refundable," the legislative draft specifies.

Impact on State Revenues and Supreme Court Precedent

The legislative move comes in the backdrop of the July 2024 Constitution Bench judgment of the Supreme Court, which had affirmed states' powers under Entry 49 and Entry 50 of the State List to levy taxes on mineral rights and permitted retrospective recovery of dues dating back to April 1, 2005.

Mineral-rich states—including Odisha, Jharkhand, and Chhattisgarh—face significant fiscal adjustments as anticipated collections from retrospective cesses (such as Odisha's ORISED Act estimates) are invalidated under the new federal statutory framework.

Industry Stability vs. State Fiscal Autonomy

The passage of the Bill has triggered debate among policymakers and industry stakeholders regarding fiscal federalism and economic stability:

• Industry Defense: Representatives from core sectors, including steel, power, and manufacturing, welcomed the legislation, noting that uncollected retrospective tax claims would have created severe financial stress and inflated input material costs across national supply chains.
• Opposition Concerns: Opposition lawmakers and state representatives criticized the rapid voice-vote passage of the Bill, arguing that restricting state taxation powers undermines fiscal autonomy and results in substantial prospective revenue losses for resource-rich states.