- Why in news
- On 18 August 2026, PIB explained the MMDR Amendment Act, 2026, which bars States from imposing fresh taxes on mineral rights and mineral-bearing lands except on conditions set by the Centre.
- What it is
- The MMDR Act, 1957 is the central law for regulating mines and developing minerals in India. It separates major minerals, which the Centre regulates, from minor minerals, which States regulate. The 2026 amendment adds a fiscal layer to this framework by limiting State levies on mineral rights and lands.
- New Section 9D
- No State may impose a tax, cess or other levy on mineral rights or mineral-bearing lands, except as per conditions the Centre prescribes. This covers levies based on quantity, value, royalty or any other basis.
- Past levies
- Levies not paid or collected before the amendment applies are treated as invalid. Amounts already deposited or recovered are not refunded.
- Section 13 rules
- Section 13 is amended so the Centre can make rules prescribing the conditions for State levies.
- Minor minerals
- Nearly 50 minor minerals such as sand, granite and marble stay fully under State control. The Act does not affect them.
- DMFs
- District Mineral Foundations collections continue unchanged. The full DMF amount goes to local projects decided by the district administration.
- Auction regime
- The 2015 amendment ended discretionary allocation of concessions and brought in competitive auction, giving States auction premium.
- Passage
- Both Houses of Parliament passed the Bill on 13 August 2026.
- Revenue split
- About 90% of taxes and statutory payments in mining accrue to States, and this continues.
- Levies
- States levy around 14 types of charges on mining, including royalty, auction premium, dead rent, DMF contribution, GST and transit fee.
- Auction premium
- Auction premium is the amount quoted by the successful bidder. It became a State revenue source after the auction regime began in 2015.
- Imports
- India imported minerals worth Rs 10,12,529 crore in FY 2025-26.
- Parent Act
- Mining is governed by the MMDR Act, 1957, under which the Union controls mine regulation and mineral development.
- Mineral-bearing lands
- Union control now also covers mineral-bearing lands, identified by parameters the Centre prescribes.
- Rule-making
- Section 13 is amended so the Centre can make rules prescribing conditions or restrictions for State levies.
- Parliamentary status
- The bill has been passed by both Houses of Parliament.
Don’t confuse with Major vs minor minerals: Major minerals such as coal and iron ore are regulated by the Centre. Minor minerals such as sand and granite are under States. The 2026 Act affects only the former's fiscal regime.
Don’t confuse with Royalty vs auction premium: Royalty is a statutory payment on mineral produced. Auction premium is the bid amount paid to the State after a block is auctioned.
Don’t confuse with Royalty vs tax on mineral rights: Royalty is paid under the MMDR Act's Second Schedule. The Bill's Section 9D covers levies on mineral rights and lands, including those based on royalty, and subjects them to Centre's conditions.
Don’t confuse with Section 9D vs Section 13: Section 9D restricts State levies. Section 13 is the Centre's rule-making power, amended to prescribe the conditions.
Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.
Why it matters
- Creates a uniform, predictable tax regime that can lower input costs for steel, cement and power and attract investment.
- Supports energy and critical-mineral security by keeping strategic mineral projects viable.
- Aims at a predictable fiscal regime for investors, to raise investment in mining and support Atmanirbhar Bharat.
- May reduce import dependence, as minerals imports were Rs 10.12 lakh crore in FY 2025-26.
- Gives miners predictability and ends retrospective or unpredictable State levies.
- Aims at a uniform national fiscal framework, supporting critical mineral security and lower input costs.
Problems
- Curbs State fiscal autonomy over taxing mineral lands and rights, raising federalism concerns, especially for mineral-rich States.
- Declaring past levies invalid may invite litigation, since it cuts across earlier judicial rulings on State taxing powers.
- Federal concern: States may see caps on mineral taxation as intrusion into their fiscal autonomy.
- Balancing national market uniformity with State revenue needs and mining-area communities.
- Curbs State fiscal autonomy and may affect mineral-rich States' revenue, raising federalism concerns about the Union-State balance.
- May face legal challenge over legislative competence, since State taxing powers on mineral rights and lands are in the State List, and over invalidating past levies.
Way forward
- Frame the Section 13 rules after consulting States so conditions stay fair and clear.
- Protect State revenue and DMF flows, and settle disputes through the Inter-State Council or GST Council-style consultation.
- Consult States through forums such as the Inter-State Council or GST Council-type mechanisms on tax limits.
- Keep the State revenue share and DMF funds for affected communities protected.
- Frame Section 13 rules after consulting States, with clear, transparent limits on levies.
- Compensate or share revenue with mineral-bearing States, and use the District Mineral Foundation for affected communities.
Put in your answer
State revenue share: In coal, States received 89.5 percent of the total in 2025-26, up from 55.6 percent in 2014-15.
Import bill: India imported minerals worth ₹10,12,529 crore in FY 2025-26.
State revenue data: Major mining States got over Rs 5 lakh crore in FY 2015-16 to FY 2025-26, against Rs 82,000 crore for the Centre.
Auction premium data: Major mining States collected over Rs 96 thousand crore in auction premium during 2020-21 to 2025-26.
Union control and public interest: Section 2 of the MMDR Act declares Union control of mine regulation and mineral development in the public interest, and the Bill widens it to mineral-bearing lands.
Retrospective levies invalid: The Bill invalidates uncollected past levies but allows no refund of amounts already recovered, a balance between miners and States.
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- 2019Prelims Q62Which statements on minor minerals' grant powers and rule-making are correct?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Single answer
Ours, not from a UPSC paper
Consider the following statements about the Mines and Minerals (Development and Regulation) Amendment Act, 2026: 1. It inserts a new Section 9D that bars States from levying any tax, cess or other levy on mineral rights or mineral-bearing lands, except as per conditions prescribed by the Centre. 2. It empowers the Central Government, by amending Section 13, to make rules prescribing the conditions for State levies. 3. It requires States to refund all invalidated levies that were already deposited or recovered before the Act commenced. 4. It brings the taxation of minor minerals such as sand and granite under Central conditions. Which of the statements given above are correct?
Which of the statements given above are correct?
True or false?
1 of 17
Statements the way Prelims prints them. Say first, then see the fact.
1.Under the Act, States may impose levies on mineral rights only as per conditions or restrictions prescribed by the Central Government.
True. Levies are allowed only within Centre-prescribed conditions.
2.The Act requires States to refund all amounts of invalidated levies already collected before its commencement.
False. Amounts already deposited or recovered are not refundable.
3.The power to prescribe conditions for State levies is given to the Central Government by an amendment to Section 13 of the MMDR Act.
True. Section 13 is amended to give rule-making power to the Centre.
4.The Act also brings the taxation of minor minerals such as sand and granite under Central conditions.
False. Minor minerals remain entirely under State control; the Act has no bearing on them.
5.Under the MMDR Act, 1957, major minerals are regulated by the Centre and minor minerals by the States.
True. Major minerals: Centre. Minor minerals: States.
6.The National Critical Mineral Mission was approved in January 2025 with an outlay of ₹16,300 crore including ₹2,600 crore budgetary support.
True. Outlay ₹16,300 crore, of which ₹2,600 crore is budgetary support.
7.The competitive auction regime for mineral concessions was introduced by the 2015 amendment to the MMDR Act, which gave States auction premium as a new income source.
True. The 2015 amendment introduced auctions and auction premium.
8.About 90% of total taxes and statutory payments in mining accrue to the States.
True. Around 90% goes to States, and this continues after the amendment.
9.Auction premium became a State revenue source after the auction regime was introduced in 2015.
True. Auction premium is the amount quoted by the successful bidder, and the auction regime began in 2015.
10.Contribution to the District Mineral Foundation is among the levies States charge on mining operations.
True. DMF contribution is listed among the mining levies.
11.From FY 2015-16 to FY 2025-26, revenue to the Centre from mining exceeded that to the major mining States.
False. Major mining States got over Rs 5 lakh crore, against only Rs 82,000 crore for the Centre.
12.The MMDR Act, 1957 is a central law enacted under the Union's power to regulate mines and mineral development in the public interest.
True. Entry 54 of the Union List covers regulation of mines and mineral development to the extent Parliament declares it expedient in the public interest.
13.Under the MMDR Act, the State governments regulate major minerals, while the Centre regulates minor minerals.
False. The Centre regulates major minerals; States make rules for minor minerals.
14.The Mines and Minerals (Development and Regulation) Act, 1957 is the law governing mining in India.
True. Mining in India is governed by the MMDR Act, 1957.
15.Under the Bill, amounts already recovered by States as levies before commencement must be refunded to miners.
False. Amounts already deposited or recovered are not liable to be refunded.
16.Levies not paid or collected by a State before the Amendment applies are treated as invalid.
True. Unpaid or uncollected past levies are treated as invalid.
17.The Union's control over mine regulation and mineral development in the MMDR Act is declared under Section 2.
True. Section 2 of the Act declares Union control in the public interest.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The MMDR Amendment Act, 2026 bars States from imposing fresh taxes on mineral rights and mineral-bearing lands except on conditions set by the Centre. Examine the main provisions of the Act and discuss its implications for Centre-State fiscal relations and for the mining sector.
Worth revising until Prelims 2028: most news questions come within two years of the event.