MMDR Bill can cut legacy mineral levy risks, boost mine economics: NMDC

NMDC says proposed restrictions on state-level mineral levies could provide greater fiscal certainty, reduce unexpected legacy claims and support long-term investment

The proposed amendments to the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, could provide greater certainty to companies in the field by reducing the overhang of retrospective levies and creating a more predictable fiscal architecture, according to National Mineral Development Corporation (NMDC), India’s largest iron ore-mining company.

 

This came a day after the central government introduced the Bill in the Lok Sabha. 

 

NMDC, a state-run firm, said the proposed restrictions on state-level taxes, cess and other levies on mineral rights and mineral-bearing lands could help ensure that the fiscal burden on mineral extraction remained within a defined framework.

 

“This is positive for mining companies because it allows long-term operations and investment to be planned on more stable economic assumptions,” a senior NMDC official told Business Standard.

 

The Bill also proposes that mineral-related levies imposed by states but not recovered or deposited before the amendment comes into force would be deemed invalid. The official said the provision could bring closure to unresolved levies and reduce the overhang of potential legacy liabilities for mining companies. “It would reduce the risk of unexpected claims from the past. This can alter the economics of mining projects after investment has been made,” he said.

 

He said mining projects required large capital investment and had long gestation periods, making the fiscal burden an important factor in project viability. “A more predictable levy framework would make project economics easier to assess and could support investment in new mines and capacity expansion,” the official said. He added that the proposed changes could also bring greater consistency in the fiscal treatment of mineral resources across states. “This would help companies operating across multiple mineral-producing regions plan investment,” he said.

 

The Bill comes against the backdrop of the Supreme Court’s July 2024 judgment in the Mineral Area Development Authority versus Steel Authority of India case, where a nine-judge Constitution Bench held that states had the powers to tax mineral rights. The court, however, also held that the existing MMDR Act had not imposed limits to those powers although Parliament could do so through a law.

 

Further, in line with its July judgment, on August 14, 2024, a Supreme Court order said states could impose or renew taxes on mineral rights and land.  However, such tax demands will apply only to transactions from April 1, 2005, onwards. The court allowed mining companies to pay the dues in instalments over 12 years from April 1, 2026, and waived interest and penalties on dues relating to the period before July 25, 2024.

 

The official said the proposed amendments sought to establish a legislative framework following the evolving legal position and would make it easier for mining companies to incorporate such obligations into project economics. He said NMDC did not foresee any significant adverse implications from the proposed framework and viewed the move towards a defined and consistent regime as positive for long-term investment in mineral development.