UPSC Prelims Practice Questions — ‘MMDR Amendment Act expected to bring greater tax uniformity’

Q1. Consider the following statements comparing the mineral levy regime under the Mines and Minerals (Development and Regulation) Act, 1957 as it stood earlier with the regime after the 2026 amendment: 1. Under the newly inserted Section 9D, a State levy on mineral rights is barred whether it is computed on the basis of mineral quantity, mineral value or royalty. 2. Royalty on minor minerals, whose rates were earlier fixed by State Government rules, is henceforth to be fixed by the Central Government. 3. The 2026 amendment supplies a definition of 'mineral-bearing land' keyed to parameters to be prescribed by the Central Government, an expression not so defined in the parent Act earlier. Which of the statements given above is/are correct?

  1. Under the newly inserted Section 9D, a State levy on mineral rights is barred whether it is computed on the basis of mineral quantity, mineral value or royalty.
  2. Royalty on minor minerals, whose rates were earlier fixed by State Government rules, is henceforth to be fixed by the Central Government.
  3. The 2026 amendment supplies a definition of 'mineral-bearing land' keyed to parameters to be prescribed by the Central Government, an expression not so defined in the parent Act earlier.
  • A. 1 only
  • B. 1 and 2 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q2. The conditions and restrictions subject to which a State Government may still levy a tax or cess on mineral rights after the 2026 amendment are to be laid down by which one of the following?

  • A. The Ministry of Coal, through orders issued by the Coal Controller's Organisation
  • B. The Ministry of Finance, through notifications of the Department of Revenue
  • C. The Ministry of Mines, through rules framed under Section 13 of the parent Act
  • D. The Ministry of Steel, in consultation with NMDC Limited and SAIL

Q3. Consider the following statements regarding the Supreme Court's 2024 decision in Mineral Area Development Authority v. Steel Authority of India as compared with the earlier judicial position: 1. It departed from the position taken in the India Cement case of 1989, which had proceeded on the basis that royalty is in the nature of a tax. 2. The nine-judge Constitution Bench was unanimous in locating the States' competence to tax mineral rights in Entry 50 of the State List. 3. It held that Parliament's power under the Union List entry on regulation of mines and mineral development does not extend to Entry 49 of the State List. Which of the statements given above is/are correct?

  1. It departed from the position taken in the India Cement case of 1989, which had proceeded on the basis that royalty is in the nature of a tax.
  2. The nine-judge Constitution Bench was unanimous in locating the States' competence to tax mineral rights in Entry 50 of the State List.
  3. It held that Parliament's power under the Union List entry on regulation of mines and mineral development does not extend to Entry 49 of the State List.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. With reference to the Supreme Court's 2024 rulings in the Mineral Area Development Authority matter and the consequential order that followed, consider the following: 1. Royalty payable under a mining lease is a contractual consideration and not in the nature of a tax. 2. Recovery of past State demands was permitted in instalments spread over twelve years beginning 1 April 2026. 3. State demands relating to periods falling before 1 April 2005 were also allowed to be recovered. 4. Interest and penalty attributable to the period prior to the judgment were waived. Which of the above is/are correctly identified?

  1. Royalty payable under a mining lease is a contractual consideration and not in the nature of a tax.
  2. Recovery of past State demands was permitted in instalments spread over twelve years beginning 1 April 2026.
  3. State demands relating to periods falling before 1 April 2005 were also allowed to be recovered.
  4. Interest and penalty attributable to the period prior to the judgment were waived.
  • A. 1 and 3
  • B. 2, 3 and 4
  • C. 1, 2 and 4
  • D. 1 and 4 only

Q5. Which one of the following amendments to the Mines and Minerals (Development and Regulation) Act, 1957 first made auction the mandatory method for the grant of mineral concessions?

  • A. The Amendment Act of 2015, which also provided for the District Mineral Foundation
  • B. The Amendment Act of 2021, which also removed end-use reservation of mines
  • C. The Amendment Act of 2023, which also introduced the exploration licence
  • D. The Amendment Act of 2026, which also inserted Section 9D in the parent Act

Q6. Consider the following statements regarding the changes made to the Mines and Minerals (Development and Regulation) Act, 1957 by the amendments of 2021 and 2023: 1. The 2021 amendment allows a captive mine to sell up to half of the minerals produced by it in a year after meeting the requirement of its attached plant, on payment of an additional amount. 2. The 2023 amendment introduced the exploration licence, grantable in respect of 29 minerals listed in the Seventh Schedule to the Act. 3. The 2023 amendment classified lithium, niobium and zirconium as atomic minerals for the first time. Which of the statements given above is/are correct?

  1. The 2021 amendment allows a captive mine to sell up to half of the minerals produced by it in a year after meeting the requirement of its attached plant, on payment of an additional amount.
  2. The 2023 amendment introduced the exploration licence, grantable in respect of 29 minerals listed in the Seventh Schedule to the Act.
  3. The 2023 amendment classified lithium, niobium and zirconium as atomic minerals for the first time.
  • A. 1 and 2 only
  • B. 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. With reference to the Seventh Schedule of the Constitution of India as it bears on mines and minerals, consider the following: 1. Taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development — State List. 2. Regulation of mines and mineral development to the extent to which such regulation is declared by Parliament by law to be expedient in the public interest — Union List. 3. Taxes on lands and buildings — Union List. 4. Regulation of labour and safety in mines and oilfields — State List. Which of the above is/are correctly identified?

  1. Taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development — State List.
  2. Regulation of mines and mineral development to the extent to which such regulation is declared by Parliament by law to be expedient in the public interest — Union List.
  3. Taxes on lands and buildings — Union List.
  4. Regulation of labour and safety in mines and oilfields — State List.
  • A. 1 and 2 only
  • B. 1, 2 and 4
  • C. 2 and 3
  • D. 3 and 4

Q8. In the 2024 Constitution Bench ruling, the phrase 'subject to any limitations imposed by Parliament by law relating to mineral development', which qualifies the State List entry on taxes on mineral rights, was understood to mean which one of the following?

  • A. Parliament may through such a law restrict, condition or even prohibit the levies concerned
  • B. Parliament may prescribe only the ceiling rate for such levies, and cannot bar their imposition
  • C. Parliament's law must be ratified by the legislatures of not less than one-half of the States
  • D. Parliament may act only in respect of minerals specified in the First Schedule of the MMDR Act

Q9. With reference to the passage of the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 and the objects stated for it, consider the following: 1. It was introduced in the Lok Sabha on 10 August 2026. 2. It was passed by the Rajya Sabha on 13 August 2026. 3. The reasons stated for the Bill include multiplicity of taxes, non-uniform rates across States and retrospective imposition of levies. 4. It abolishes every State-level levy connected with mining, including levies on minor minerals, in all States without exception. Which of the above is/are NOT correct?

  1. It was introduced in the Lok Sabha on 10 August 2026.
  2. It was passed by the Rajya Sabha on 13 August 2026.
  3. The reasons stated for the Bill include multiplicity of taxes, non-uniform rates across States and retrospective imposition of levies.
  4. It abolishes every State-level levy connected with mining, including levies on minor minerals, in all States without exception.
  • A. 1 and 2
  • B. 2 and 3
  • C. 3 and 4
  • D. 4 only

Q10. Under the Mines and Minerals (Development and Regulation) Act, 1957, the rate of royalty payable in respect of a minor mineral is prescribed by which one of the following?

  • A. The Central Government, by notification amending the Second Schedule to the Act
  • B. The State Government, by rules framed under Section 15 of the Act
  • C. The District Mineral Foundation of the district concerned, with State approval
  • D. The Indian Bureau of Mines, in consultation with the Ministry of Mines

Q11. With reference to the bodies and contributions provided for under the Mines and Minerals (Development and Regulation) Act, 1957, consider the following: 1. The District Mineral Foundation is established by the State Government in districts affected by mining-related operations. 2. The National Mineral Exploration Trust is established by the Central Government for regional and detailed exploration. 3. Holders of mining leases pay to the National Mineral Exploration Trust an amount equal to two per cent of the royalty paid by them. 4. Mining leases granted on or after 12 January 2015 contribute to the District Mineral Foundation at thirty per cent of the royalty paid. Which of the above is/are correctly identified?

  1. The District Mineral Foundation is established by the State Government in districts affected by mining-related operations.
  2. The National Mineral Exploration Trust is established by the Central Government for regional and detailed exploration.
  3. Holders of mining leases pay to the National Mineral Exploration Trust an amount equal to two per cent of the royalty paid by them.
  4. Mining leases granted on or after 12 January 2015 contribute to the District Mineral Foundation at thirty per cent of the royalty paid.
  • A. 1 and 2 only
  • B. 2, 3 and 4
  • C. 1, 2 and 3 only
  • D. 1, 3 and 4

Q12. NMDC Limited, the country's largest iron ore producer and a prominent industry voice on the 2026 mineral levy reform, functions under the administrative control of which one of the following?

  • A. The Ministry of Mines, which also administers the Geological Survey of India
  • B. The Ministry of Coal, which also administers Coal India Limited
  • C. The Ministry of Steel, which also administers Steel Authority of India Limited
  • D. The Ministry of Heavy Industries, which also administers Bharat Heavy Electricals Limited