Summary: This blog examines the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, passed by both Houses of the Parliament on August 13, 2026. The bill has two principal objectives: (i) extending Union regulatory control to mineral-bearing lands and (ii) introducing a new provision that prohibits Indian states from levying any kind of imposition on mineral rights or mineral-bearing lands except under Central Government-prescribed conditions. The provision also gives retrospective relief as it invalidates unpaid and unrecovered dues and bars the refund of amounts already collected. The blog identifies key analytical concerns and analyses the bill’s constitutional sustainability, concluding that its intended outcome is riddled with procedural and constitutional challenges.
Introduction
In India, the Mines and Minerals (Development and Regulation) Act, 1957 (“Act”), governs the mining sector. In furtherance of wider public interest, the Union exercises regulatory authority over mines and the development of minerals under Section 2 of the Act.
In Mineral Area Development Authority v. Steel Authority of India[1] (“Judgment”), a nine-judge bench of the Supreme Court (“Court”) held that Indian states possess the legislative competence to levy taxes on mineral rights and that the Act does not circumscribe such power. The Court further declined to limit the ruling to prospective effect, permitting states to recover past dues dating back to 1 April 2005.
However, the legislature introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2026,[2] (“Bill”) which proposes amendments to the Act with the stated objective of establishing a uniform and balanced fiscal framework for the mineral sector nationwide. Its principal effect is to restrict state governments from imposing any new tax on mineral rights or mineral-bearing lands except in accordance with conditions prescribed by the Central Government. The constitutional foundation of the Bill lies in Entry 54 in List I of Seventh Schedule to the Indian Constitution[3] read together with Entry 50 in List II of Seventh Schedule to the Indian Constitution[4] (“State List”).
The Bill’s statement of objects and reasons notes that excessive and unpredictable fiscal burdens risk rendering mining operations commercially unviable, discouraging mineral extraction, and increasing the cost of goods and services. The amendments are accordingly intended to afford the sector greater certainty, stability, and predictability.
Key Provisions of the Bill
Union control over mineral-bearing lands: Amendments to Sections 2 and 3(ada) of the Act extends the Union’s regulatory authority to mineral-bearing lands containing mineral deposits. Such lands are to be identified in accordance with parameters prescribed by the Central Government under the Act, supplementing the existing provision declaring Union control over the regulation of mines and the development of minerals.
Limitation on state levies: Through the introduction of a new Section 9D to the Act, no Indian state may levy any tax, cess, or other imposition, by whatever name called, on mineral rights or mineral-bearing lands. This prohibition extends to levies calculated on the basis of mineral quantity, mineral value, royalty, or any other measure. Such levies may be imposed only in accordance with conditions or restrictions prescribed by the Central Government. Section 9D further provides that any such tax, cess, or other imposition that remains unrecovered or undeposited before the commencement of the Bill shall be deemed invalid. Amounts already deposited or recovered, however, shall not be refunded. The rule-making power of the Central Government[5] is also amended to provide for rules prescribing the conditions or restrictions on imposition of such tax, cess, or other imposition.
Impact of the Bill
| Before the Bill | After the Bill |
| Mineral-bearing lands were outside the Union’s regulatory reach. | Mineral-bearing lands are brought under Union regulation. |
| Mining was taxed differently in every Indian state. | A single, Centre-directed tax framework will apply under the new Section 9D |
| New levies could be introduced even after mining operations started. | States cannot impose new levies except under conditions set by the Central Government. |
| Retrospective tax demands could be raised at any time. | All pending retrospective dues are now declared invalid. |
Analysis
The Bill seeks to balance the competing objectives of (i) enhancing investor security and reducing fiscal fragmentation across states and (ii) preserving the state governments’ ability to exercise meaningful fiscal powers. Unless the transition to the new regime is appropriately managed, the period between enactment and commencement may create a race among states to recover pending demands. To avoid an implementation cliff, a clear cut-off protocol for pending assessments, recovery actions, and litigation will be essential.
While the Bill’s stated objectives appear straightforward, several aspects warrant closer scrutiny:
- The new Section 9D creates an enabling power, not a self-executing framework. No rates, caps, or formulas exist until rules are notified under the new Section 13(2)(ta). The claim of a uniform tax framework is, therefore, prospective rather than immediately realised.
- The Bill does not affect royalty (Section 9 of the Act), District Mineral Foundation contributions (Section 9B of the Act), National Mineral Exploration and Development Trust contributions (Section 9C of the Act), or auction premiums, which already constitute the dominant components of the mining fiscal burden. The inter-state cost gap addressed by the Bill is accordingly narrower than the official framing may suggest.
- The extension of Union control to mineral-bearing lands engages a field that the Supreme Court treated as a distinct state taxing power in the Judgment. The constitutional sustainability of this extension remains to be tested.
The constitutional validity of the Bill is likely to turn on the distinction drawn by the Supreme Court in the Judgment between Entry 49[6] and Entry 50 of the State List. The Supreme Court expressly held that legislature may impose “any limitations” on state taxation of mineral rights, and that the scope of that expression is wide enough to encompass even an outright prohibition. At the same time, the Supreme Court observed that the Act, as it then stood, had not in fact imposed any such limitations. The Union Government is therefore likely to contend that the Bill does no more than exercise a power that the Constitution and the Judgmentitself recognises as vested in Parliament.
The more substantial constitutional challenge is likely to arise from the Bill’s treatment of mineral-bearing lands. In the Judgment, the Supreme Court held that “The 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 further held that limitations imposed by Parliament under Entry 50 “do not operate on Entry 49 of List II because there is no specific stipulation under the Constitution to that effect.” Indian states may, therefore, contend that, while Parliament may validly restrict taxation under Entry 50 of the State List, it cannot curtail Entry 49 of the State List through an ordinary amendment to the Act.
Conclusion
The Bill represents a significant recalibration of the Centre–State fiscal relationship in the mineral sector. Its operative effect, however, is largely deferred since the uniformity it promises will materialise only upon notification of the subordinate rules. While the Bill seeks to foster a mining ecosystem, that is predictable, proportionate, competitive, and sustainable, yet its constitutional durability remains untested. Until those questions are tested and resolved, the Bill functions primarily as a statement of legislative intent rather than a fully delivered framework.
For further information, please contact:
Ramanuj Kumar, Partner, Cyril Amarchand Mangaldas
ramanuj.kumar@cyrilshroff.com
[1] 2024 INSC 554.
[2] This Bill was passed by the Lok Sabha on August 12, 2026, and by the Rajya Sabha on August 13, 2026. The full text is available here.
[3] “Regulation of 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.”
[4] “Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development.”
[5] Section 13 of the Act.
[6] “Taxes on lands and buildings.”
