The MMDR Amendment Act, 2026 has been described as recentralising fiscal federalism in the mining sector. Discuss with reference to the Supreme Court's 2024 ruling on mineral taxation.

In 2024, a nine-judge Supreme Court bench in Mineral Area Development Authority v. SAIL held that royalty is not a tax and that States are competent to tax mineral rights and mineral-bearing lands, permitting demands from 1 April 2005 [2]. The MMDR Amendment Act, 2026 legislatively narrows precisely this space.

How the Act recentralises

• Bars States from imposing any tax, cess or levy on mineral rights or mineral-bearing lands — whether based on quantity, value or royalty — except as per conditions prescribed by the Centre [1].
• Extends Union control to a new category, "mineral-bearing lands", identified by Centre-prescribed parameters of mineral content, going beyond the traditional regulation of mines and mineral development [1][2].
• Treats State levies not collected before the amendment as invalid, while amounts already collected are not refunded [1][2].

Federal and constitutional concerns

• It curtails Entry 50 (State List) taxing power the Court had just affirmed, and arguably touches Entry 49 and Entry 18, where Parliament's competence is contested [2].
• Retrospective invalidation of pending dues creates unequal outcomes between States and taxpayers who complied and those who did not — raising an Article 14 question [2].
• Wide delegation to the executive, without statutory guiding principles, shifts fiscal discretion from elected State legislatures to the Union [2].
• Mineral-rich States like Odisha and Jharkhand lose an anticipated revenue stream in a sector concentrated in their territory.

The countervailing case

• Unpredictable, layered levies imposed after operations commence raised costs and deterred investment; the Act seeks certainty, stability and predictability in the mineral fiscal regime [1].
• It continues a reform trajectory — auctions (2015), exploration licensing (2023) — aimed at a single national market for minerals [3].

The Act therefore trades federal fiscal autonomy for investor certainty. A durable settlement lies not in displacing State taxing power but in a negotiated, formula-based revenue-sharing framework through the GST Council-style consultative route, so that cooperative federalism and mineral security advance together.