Op-ed: Section 9D of mining law curbs States' mineral taxes, undercutting a 2024 verdict
The Supreme Court said States may tax mineral land. Can Parliament make that power depend on Central conditions?
Published 17 September 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
An opinion article in The Hindu argues that the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, passed by Parliament in August, is unfair to States. The Bill was introduced in the Lok Sabha on 10 August 2026 and passed by the Lok Sabha on 12 August and the Rajya Sabha on 13 August. It inserts a new Section 9D into the MMDR Act, 1957. Section 9D(1) says no tax, cess or other levy shall be imposed by a State Government on mineral rights or mineral bearing lands, whether 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". 'Mineral bearing land' is defined as land having mineral contents as per parameters prescribed under Section 5(2)(a).
Section 9D(2) deals with the past. Any such State levy not deposited with or recovered by the State before the law begins is "deemed to be invalid at all material times", while amounts already collected will not be refunded. The Statement of Objects and Reasons, signed by Mines Minister G. Kishan Reddy, cites a heavy tax burden, unpredictable new taxes and retrospective taxation, and seeks "certainty, stability and predictability" in mineral taxation. The article says the law cuts into the ruling in Mineral Area Development Authority v. Steel Authority of India (25 July 2024), where a nine-judge Bench held that royalty is not a tax and that States can tax mineral rights (Entry 50 of the State List) and mineral-bearing land (Entry 49). It notes that mineral-rich States such as Odisha and Chhattisgarh depend on mining receipts while bearing the social and environmental costs of extraction.
PRS Legislative Research has flagged four legal issues. First, Parliament's competence: land is a State subject under Entry 18 of the State List, and the Court held that Parliament's power to limit State taxes under Entry 50 extends to mineral rights, not to land under Entry 49. Second, retrospective invalidation: a legislature cannot simply declare a judicial decision ineffective. Third, Article 14: companies that paid get no refund while those that did not pay are let off. Fourth, excessive delegation: the Centre may prescribe 'conditions or restrictions' without guiding principles. The Centre's case is that mining investment needs a predictable, uniform tax regime; the States' case is that their fiscal autonomy is part of federalism.
Prelims facts
- The MMDR Amendment Bill, 2026 inserts Section 9D, barring State taxes on mineral rights and mineral bearing lands except under conditions or restrictions prescribed by the Centre.
- Section 9D(2) invalidates unpaid past State levies but bars refunds of amounts already collected.
- In Mineral Area Development Authority v. Steel Authority of India (25 July 2024), a nine-judge Bench held that royalty is not a tax and upheld States' power to tax mineral rights and mineral-bearing land.
- Entry 50 of the State List covers taxes on mineral rights subject to limits imposed by Parliament; Entry 49 covers taxes on lands and buildings.
- PRS has flagged questions of legislative competence, retrospective invalidation of a judgment, Article 14 and excessive delegation.
Quick recall
- Which new section does the MMDR Amendment Bill, 2026 insert?
- Section 9D
- When was the MMDR Amendment Bill, 2026 passed by the Rajya Sabha?
- 13 August 2026 (Lok Sabha passed it on 12 August)
- What does Section 9D(2) do to unpaid past State levies?
- Deems them invalid at all material times; amounts already collected are not refunded
- Date and Bench of the Mineral Area Development Authority judgment?
- 25 July 2024, nine-judge Bench
- Did the Supreme Court hold royalty to be a tax?
- No. It held royalty is not a tax
- Which State List entry covers taxes on mineral rights?
- Entry 50, subject to limits imposed by Parliament by law relating to mineral development
- Which State List entry covers taxes on lands and buildings?
- Entry 49
- Which two earlier cases conflicted on royalty?
- India Cement (seven judges, 1989) and Kesoram Industries (five judges, 2004)
Prelims practice question
With reference to the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, consider the following statements:
1. It inserts Section 9D into the MMDR Act, 1957.
2. It requires States to refund all mineral taxes collected before the law begins.
3. It allows States to levy taxes on mineral bearing lands only in accordance with conditions or restrictions prescribed by the Central Government.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Show answer
Answer: (c) 1 and 3 only. Statement 1 is correct: the Bill inserts Section 9D. Statement 2 is incorrect: amounts already deposited with or recovered by States are expressly not liable to be refunded; only unpaid levies are deemed invalid. Statement 3 is correct: Section 9D(1) permits State levies only in accordance with conditions or restrictions prescribed by the Centre.
Use this in UPSC Mains: previous-year questions
Recurring theme: Fiscal federalism: Centre-State distribution of taxing powers and the limits of Parliament's power
- How to use this
Gives a recent reform narrowing States' own tax base, for assessing its impact on fiscal federalism.
- The MMDR Amendment Bill, 2026, passed by Parliament in August, inserts Section 9D, barring State taxes on mineral rights and mineral bearing lands except under conditions prescribed by the Centre.
- The op-ed says it cuts into the nine-judge ruling in Mineral Area Development Authority v. Steel Authority of India (25 July 2024), which held royalty is not a tax.
- An op-ed argues mineral-rich States such as Odisha and Chhattisgarh depend on mining receipts while bearing extraction's costs; the Centre seeks 'certainty, stability and predictability'.
- How to use this
Supplies a recent Union change that strains Centre-State trust, and specific measures to rebuild it.
- The MMDR Amendment Bill, 2026 was introduced on 10 August and passed by both Houses by 13 August; Section 9D(2) invalidates unpaid past State levies without refunds.
- PRS has flagged legislative competence, retrospective invalidation of a judgment, Article 14 and excessive delegation as legal issues.
- Suggest framing the conditions in consultation with States and writing guiding principles into the statute.
- How to use this
Illustrates how Parliament can use its constitutional powers to limit a State taxing power, showing the tilt towards a strong Centre.
- Entry 50 of the State List lets States tax mineral rights subject to limits imposed by Parliament; Section 9D uses this to require Central conditions.
- PRS notes land is a State subject (Entry 18), and the 2024 Court held Parliament's limiting power covers mineral rights, not land taxes under Entry 49.
- PRS has flagged that 'conditions or restrictions' carry no guiding principles, and that a legislature cannot simply declare a judicial decision ineffective.
Mains practice question
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 seeks to restrict States' power to tax mineral rights and mineral-bearing lands. Examine the constitutional issues it raises in the light of the Supreme Court's 2024 judgment on mineral taxation. (250 words)
Model answer
The MMDR Amendment Bill, 2026, passed by Parliament in August 2026, inserts Section 9D into the MMDR Act, 1957: States may tax mineral rights or mineral bearing lands only under conditions or restrictions prescribed by the Centre, and unpaid past levies are deemed invalid.
The 2024 judgment
- Mineral Area Development Authority v. Steel Authority of India (25 July 2024), nine-judge Bench.
- Royalty is not a tax; it is a contractual payment for mineral rights.
- States can tax mineral rights under Entry 50 and mineral-bearing land under Entry 49 of the State List.
- Parliament's power to limit applies to Entry 50, not to taxes on land under Entry 49.
Constitutional issues
- Legislative competence: land is a State subject (Entry 18, List II); Entry 54 of the Union List is a regulatory power, not a taxing one.
- Separation of powers: Parliament may cure the basis of a judgment but cannot simply declare it ineffective; Section 9D(2) invalidates dues the Court allowed.
- Article 14: those who paid get no refund, while defaulters are let off.
- Excessive delegation: 'conditions or restrictions' carry no guiding principles.
- Federalism: mineral-rich States such as Odisha and Chhattisgarh bear extraction costs but lose revenue.
The Centre's case
- Multiple and retrospective levies deter investment; a uniform regime gives 'certainty, stability and predictability'.
Way forward
- Frame conditions in consultation with States and write guiding principles into the statute.
The core question is whether Section 9D is a valid limit under Entry 50 or an override of a constitutional ruling.
The basics
Why this matters
Who can tax the minerals under India's soil? The answer affects the budgets of mineral-rich States, the costs of mining companies and the balance of Indian federalism. In 2024 the Supreme Court answered in the States' favour. In August 2026 Parliament passed a Bill that makes State taxes subject to conditions set by the Centre. To judge the dispute, you need to know how the Constitution divides the subject.
How the Seventh Schedule divides minerals
The Seventh Schedule splits powers into the Union List, the State List and the Concurrent List. Minerals appear in several entries. Regulation of mines under Union control is in the Union List; taxation of mineral rights and of land is in the State List, explained in Entries 49 and 50 of the State List.
- 1Entry 54, Union ListRegulation of mines and mineral development, to the extent Parliament declares Union control expedient
- 2Entry 23, State ListRegulation of mines and mineral development, subject to the Union List entry
- 3Entry 49, State ListTaxes on lands and buildings
- 4Entry 50, State ListTaxes on mineral rights, subject to limits imposed by Parliament by law relating to mineral development
Royalty is not a tax
Mining companies pay the State a royalty, a payment for the right to extract minerals. For decades courts disagreed on whether royalty was itself a tax. The question mattered because, if it was a tax, the MMDR Act's royalty provisions could be read as occupying the field and leaving no room for State taxes. The debate is set out in Royalty versus tax.
- 1957Mines and Minerals (Development and Regulation) Act enacted
- 1989India Cement: a seven-judge Bench treats royalty as a tax
- 2004Kesoram Industries: a five-judge Bench reads India Cement differently
- 30 March 2011Three-judge Bench refers the conflict to nine judges
- 25 July 2024Nine-judge Bench: royalty is not a tax; States may tax mineral rights and land
- 10 to 13 August 2026MMDR Amendment Bill introduced and passed by both Houses
What the Bill changes
The Bill inserts Section 9D. It does not ban State taxes outright; it makes them subject to Central conditions and wipes out unpaid past demands. The judgment and its reasoning are in Mineral Area Development Authority v. Steel Authority of India (2024), and the legal limits on undoing judgments by statute are in Retrospective validation laws.
- States can tax mineral rights (Entry 50)
- States can tax mineral-bearing land (Entry 49)
- Dues allowed for the period from 1 April 2005, paid in phases
- State levies only under conditions prescribed by the Centre
- Covers both mineral rights and mineral bearing lands
- Unpaid past levies deemed invalid; no refunds of amounts collected
Go deeper
In one line: An op-ed in The Hindu argues that Section 9D of the MMDR Amendment Bill, 2026, which subjects State taxes on mineral rights and mineral bearing lands to Central conditions, is unfair to States and undercuts the Supreme Court's 2024 ruling.
Why it matters for UPSC
Centre-State financial relations and the Seventh Schedule are core GS2 topics. The story combines a landmark nine-judge judgment, a new statutory section and the classic question of whether Parliament can override a court ruling. Prelims can test the entries and the holding.
The core idea
In Mineral Area Development Authority v. Steel Authority of India (2024), the Supreme Court held that royalty is not a tax, settling the Royalty versus tax debate, and upheld State taxing power under Entries 49 and 50 of the State List. Section 9D now lets the Centre prescribe conditions on those taxes and invalidates unpaid past demands. Critics say this goes beyond what Retrospective validation laws may lawfully do.
Numbers and dates to remember
- 1957: MMDR Act enacted.
- 25 July 2024: nine-judge Bench judgment; dues allowed for the period from 1 April 2005.
- 10 August 2026: Bill introduced in the Lok Sabha; passed 12 August (Lok Sabha) and 13 August (Rajya Sabha).
- Section 9D(1): Central conditions on State levies; Section 9D(2): unpaid levies invalid, no refunds.
- Entry 49: taxes on lands and buildings; Entry 50: taxes on mineral rights; Entry 18: land; Entry 54, Union List: regulation of mines.
Where to go next
- Mineral Area Development Authority v. Steel Authority of India (2024): what the Court decided.
- Entries 49 and 50 of the State List: the two taxing powers at stake.
- Royalty versus tax: the 35-year debate the Court settled.
- Retrospective validation laws: when Parliament may undo a judgment's effect.
Go deeper: a valid limit or an override?
The Centre's argument. Entry 50 of the State List is expressly 'subject to any limitations imposed by Parliament by law relating to mineral development'. Section 9D can be defended as exactly such a limitation. The Statement of Objects and Reasons points to multiple levies, unpredictable new taxes and retrospective taxation that make mining projects less viable, and seeks certainty, stability and predictability for investors.
The States' argument. The op-ed says the law hurts States that depend on mining receipts, such as Odisha and Chhattisgarh, while they carry the social and environmental costs of mining. Their fiscal autonomy under Entries 49 and 50 of the State List is part of the federal design that the Court protected in Mineral Area Development Authority v. Steel Authority of India (2024).
The four legal questions PRS raises.
- Competence: the Court held Parliament's power to limit applies to taxes on mineral rights (Entry 50), not to taxes on land (Entry 49). Land is under Entry 18 of the State List. Section 9D covers 'mineral bearing lands' too.
- Separation of powers: under the law on Retrospective validation laws, a legislature may remove the basis of a judgment but cannot simply declare the judgment ineffective. Section 9D(2) wipes out dues the Court allowed.
- Article 14: those who paid cannot get refunds, while those who did not pay owe nothing.
- Delegation: the Centre may prescribe 'conditions or restrictions' with no policy stated in the law.
The royalty link. Because the Court settled the Royalty versus tax question in favour of States, the Bill expressly lists levies based on royalty payable among those that need Central conditions.
Mineral Area Development Authority v. Steel Authority of India (2024)
The 2024 nine-judge ruling that the Bill is said to undercut.
In one line: On 25 July 2024 a nine-judge Bench of the Supreme Court held that royalty is not a tax and that States have the power to tax mineral rights and mineral-bearing land.
Background
In 2011 a three-judge Bench referred the question to nine judges because two earlier decisions conflicted: India Cement (seven judges, 1989) and Kesoram Industries (five judges, 2004). The majority judgment in 2024 was written by Chief Justice D.Y. Chandrachud, by an 8:1 majority, with Justice B.V. Nagarathna dissenting.
What it held
- Royalty is a contractual payment for the right to extract minerals, not a tax.
- States can tax mineral rights under Entry 50 and mineral-bearing land under Entry 49 of the State List.
- The MMDR Act does not limit States' power to tax mineral-bearing land.
- The Court later allowed tax demands for the period from 1 April 2005, subject to a phased payment schedule.
Where to go next
Entries 49 and 50 of the State List
The two State taxing powers at the centre of the dispute.
In one line: Entry 49 of the State List lets States levy taxes on lands and buildings, and Entry 50 lets them levy taxes on mineral rights, subject to limits Parliament imposes by law relating to mineral development.
The difference that matters
Entry 50 carries a built-in qualification: Parliament may limit it through a law on mineral development. Entry 49 carries no such qualification. The Supreme Court held in 2024 that the power to limit applies to taxes on mineral rights, not to taxes on land, which is also a State subject under Entry 18.
Why it is in the news
Section 9D of the MMDR Amendment Bill, 2026 subjects State taxes on both mineral rights and mineral bearing lands to Central conditions. Its defenders call it a limitation under Entry 50; critics say that, for land, Entry 49 gives Parliament no such opening.
Where to go next
Royalty versus tax
Why the character of royalty decided the case.
In one line: Royalty is what a mining lessee pays the owner of minerals for the right to extract them, while a tax is a compulsory levy imposed by a sovereign for public purposes.
Why the label mattered
If royalty were a tax, the royalty provisions of the MMDR Act could be read as Parliament itself taxing minerals, leaving little space for State taxes. In India Cement (1989) a seven-judge Bench was read as treating royalty as a tax. In Kesoram Industries (2004) a five-judge Bench held that royalty is not a tax, reading India Cement differently. The conflict went to nine judges in 2011.
The answer
In 2024 the Supreme Court held that royalty is not a tax. It arises from the contract between the lessor and the lessee. This cleared the way for States to tax mineral rights. The 2026 Bill now mentions levies based on royalty among those needing Central approval.
Where to go next
Retrospective validation laws
When a legislature may, and may not, undo a court's ruling.
In one line: A validation law changes the law retrospectively to remove the basis of a court ruling; it is valid only if it cures the defect the court found, not if it simply declares the ruling ineffective.
The principle
Courts in India accept that legislatures can pass laws with retrospective effect and can change the legal basis on which a judgment rested. What a legislature cannot do is overrule a judgment directly, because that would be an encroachment on the judiciary's domain and breach the separation of powers.
Why it is in the news
Section 9D(2) of the MMDR Amendment Bill, 2026 deems unpaid State mineral levies invalid 'at all material times', even though the Supreme Court in 2024 allowed States to raise demands for the period from 1 April 2005. PRS Legislative Research has flagged this as possibly unconstitutional. It also raises an Article 14 issue, since amounts already paid will not be refunded.
Where to go next
Take the 17 September 2026 quiz: 30 Prelims-style questions with answers