Govt notifies MMDR Act even as states threaten to move Supreme Court

The notification comes even as some state governments have criticised the legislation.
| Photo Credit:
Tuane Fernandes

The government on Saturday notified the Mines and Minerals (Development and Regulation) Amendment Act, 2026, MMDR Act, even as state governments of Karnataka, Kerala and Telangana plan to challenge the legislation.

The act, which was passed in Parliament in the recently concluded monsoon session, restricts states’ powers to levy taxes on mineral rights and mineral-bearing lands. Lok Sabha had passed the bill on august 12th, while Rajya Sabha cleared it on August 13th.

In a gazetted notification on August 22nd, the government said ‘In exercise of the powers conferred by sub-section (2) of section 1 of the Mines and Minerals (Development and Regulation) Amendment Act, 2026 (20 of 2026), the Central Government hereby appoints the date of publication of this notification in the official Gazette as the date on which the provisions of the said Act shall come into force.’

The act prohibits state government from imposing tax or cess on mineral rights; or mineral bearing lands, either based on mineral quantity, mineral value, royalty or otherwise, except in accordance with such conditions or restrictions as may be prescribed by the Central Government.

The notification comes even as some state governments have criticised the legislation. States such as Jharkhand, Karnataka, Kerala and Telangana are likely to move the Supreme Court to challenge the latest amendments to the MMDR Act.

Further, Odisha’s main opposition party, the Biju Janata Dal (BJD), has also criticised the legislation.

Explaining its rationale behind the act, the government said that states are presently levying around 14 types of taxes, charges, fees and other levies, including royalty, auction premium, dead rent, payments to District Mineral Foundations (DMFs), GST and transit fees.

Further, some States have also introduced taxes on mineral-bearing lands, resulting in an additional financial burden on Government companies. In certain cases, such taxes are as high as 20 per cent, it emphasised.

The Centre emphasizes that the Act provides for a stable and rational tax structure for both domestic economic growth or regional growth, and national strategic interests. This stability will attract investment, boost production of critical minerals, and reduce reliance on imports of minerals.

“Minerals are primary raw materials for steel, power, cement, and infrastructure. When states impose heavy taxes at the extraction stage, it creates a cascading tax effect that inflates the input cost of minerals thereby increasing manufacturing costs and ultimately raises the cost of living for ordinary citizens,” the centre said in a statement on August 19th.

The centre has stressed that this Act is not meant to benefit any particular corporation. 

‘It is meant to bring clarity, regulation, and statutory correction to the tax structure in the Mining Sector. Today, mineral blocks are not allocated at anyone’s discretion. All blocks are allocated through 100 per cent transparent e-auctions, based on competitive bidding. The system that existed before 2014 no longer exists,’ it added.

Around 725 mineral blocks have been auctioned and 105 are operational. Similarly, 141 coal mines have been successfully auctioned, of which 23 are operational.

Copyright© 2026, THG PUBLISHING PVT LTD. or its affiliated companies. All rights reserved.

Source: Read the original article on www.thehindubusinessline.com