1 week ago
Government Notifies MMDR Amendment as States Plan Challenge
The government has started a new law about taxes on minerals.
Minerals are materials used to make things such as steel, electricity infrastructure and cement.
The law limits the taxes that state governments can charge on minerals and mineral-rich land.
The Central Government says this will make mining costs clearer and lower.
It also says lower costs could attract investment and reduce dependence on imported minerals.
Several states disagree and may ask the Supreme Court to examine the law.
The states believe the change reduces their power to raise money from mineral resources.
The law took effect after a gazetted notification dated August 22, 2026.
The Central Government brought the Mines and Minerals (Development and Regulation) Amendment Act, 2026, into force through an August 22 gazetted notification.
The amendment restricts states from imposing taxes or cess on mineral rights and mineral-bearing lands, except under centrally prescribed conditions.
Karnataka, Kerala, Telangana and Jharkhand are expected to challenge the legislation in the Supreme Court.
The Centre says the law will simplify mineral taxation, attract investment, increase critical-mineral production and reduce import dependence.
The government says states have imposed about 14 types of mineral-related levies, while 725 mineral blocks and 141 coal mines have been auctioned.
- Who
- The Central Government, state governments including Karnataka, Kerala, Telangana and Jharkhand, and the Supreme Court of India are involved.
- What
- The Central Government notified and brought into force the Mines and Minerals (Development and Regulation) Amendment Act, 2026, which restricts state mineral-related taxes and cess.
- Where
- India, through a notification published in the official Gazette.
- When
- The Act was passed by the Lok Sabha on August 12, 2026, by the Rajya Sabha on August 13, and notified on August 22, 2026; the article was published on August 23.
- Why
- The Centre says the law is intended to create a stable tax structure, reduce cascading costs and support investment and critical-mineral production; several states oppose it because it limits their taxing powers.
Central Government Rationale
State Governments’ Objections
Control over mineral taxation
Central Government Rationale
The Centre says states’ multiple taxes and charges create a complicated and costly system, and that restrictions will provide clarity and a stable national structure.
State Governments’ Objections
States including Karnataka, Kerala, Telangana and Jharkhand are preparing to challenge the law, which they view as restricting their authority to tax mineral rights and mineral-bearing land.
Economic impact
Central Government Rationale
The government says heavy extraction-stage taxes create cascading costs that raise manufacturing expenses and ultimately increase living costs for citizens.
State Governments’ Objections
Opposing states and Odisha’s Biju Janata Dal have criticised the legislation, while the article does not detail their specific alternative tax proposals.
Effect on mining and investment
Central Government Rationale
The Centre says the law will attract investment, boost critical-mineral production, reduce import reliance and support domestic and regional economic growth.
State Governments’ Objections
The planned Supreme Court challenge reflects concerns that the amendment changes the financial relationship between the Centre and mineral-producing states.
Key facts
- Legislation
- Mines and Minerals (Development and Regulation) Amendment Act, 2026
- Effective date
- The date of publication of the August 22, 2026, Gazette notification
- State challenge
- Karnataka, Kerala, Telangana and Jharkhand are likely to approach the Supreme Court
- Mineral levies cited
- The Centre says states currently impose around 14 types of taxes, charges, fees and other levies
- Mineral blocks auctioned
- 725, of which 105 are operational
- Coal mines auctioned
- 141, of which 23 are operational
- Government rationale
- The Centre says the law will promote investment, production of critical minerals and lower mineral-related input costs
Quotes
The Central government
The Union government, explaining the rationale for the amendment
“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.”
thehindubusinessline.com
“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.”
thehindubusinessline.com
Sources
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