Central Government Notifies MMDR Amendment Act 2026 Amid Opposition From States

The Central Government has notified the Mines and Minerals (Development and Regulation) Amendment Act, 2026, following its passage in Parliament during the recent monsoon session. The Lok Sabha cleared the bill on August 12, followed by the Rajya Sabha on August 13. The gazette notification issued on August 22 confirmed that the provisions of the Act have come into force immediately upon publication.

The newly enacted legislation restricts state governments from imposing taxes or cesses on mineral rights or mineral-bearing lands, whether based on mineral quantity, value, royalty, or other parameters, except under conditions prescribed by the Central Government. The Centre stated that states currently levy around 14 different types of taxes, charges, and fees, including royalties, auction premiums, dead rent, GST, and transit fees. According to the government, some states have introduced additional taxes on mineral-bearing lands resulting in financial burdens as high as 20 percent on government companies.

Despite the official notification, the legislation faces strong pushback from regional administrations. State governments including Karnataka, Kerala, Telangana, and Jharkhand are reportedly planning to move the Supreme Court to challenge the amendments. Additionally, Odisha’s main opposition party, the Biju Janata Dal (BJD), has voiced criticism against the legislation.

Defending the rationale behind the Act, the Centre maintained that the legislation aims to establish a stable and rational tax structure to support domestic economic growth, regional development, and national strategic interests. The government noted that heavy extraction-stage taxes by states create a cascading effect that inflates input costs for essential raw materials like steel, power, cement, and infrastructure, ultimately raising manufacturing costs and consumer prices.

The Centre further emphasized that the Act is designed to bring statutory clarity and regulation to the mining sector rather than benefit specific corporations. Highlighting current allocation transparency, the government stated that mineral blocks are no longer distributed at discretion but are allocated entirely through competitive e-auctions. To date, approximately 725 mineral blocks and 141 coal mines have been successfully auctioned, with 105 mineral blocks and 23 coal mines currently operational.

"The enforcement of the MMDR Amendment Act 2026 marks a significant structural shift in regulatory control over the mining sector. By aiming to eliminate cascading tax effects and curb varying state-level levies, the Centre is attempting to stabilize input costs for core industries like steel, cement, and infrastructure. However, the impending legal challenges from state governments indicate that federal-state jurisdictional friction over mineral taxation will remain a critical regulatory hurdle to monitor for businesses dependent on raw material supply chains." — Dr. Shishir Gupta, Founder & CEO, StartupLanes