According to industry experts, the mining industry tax reforms in India, which were introduced this month, will create political certainty, eliminate the threat of retrospective tax claims and strengthen domestic iron ore supplies.
The Mines and Minerals (Development and Regulation) Amendment Act of 2026 (MMDR), which took effect on August 22, restricts states from independently imposing new taxes and procedures related to mining. According to the law, any fees must now comply with the conditions and restrictions set by the central government.
This followed a July 2024 Supreme Court decision in which a majority of eight judges ruled that royalties paid by mining companies are separate from taxes and are simply a payment for the right to mine. The court also ruled that state governments have the right to set their own taxes on mining rights.
The court also ruled in August 2024 that Indian state governments can require mining companies to pay previous taxes, but not for the period before April 1, 2005.
"The recent[amendment]eliminates two very important things. Firstly, there is uncertainty about your business models, and secondly, the retrospective growth, which, after millions of investments, can completely undermine your economy," Arnab Kumar Hazra, head of Strategy and Corporate Relations at Rashmi Group, said at an industry event in Kolkata. Rashmi Group is an industrial conglomerate with various divisions, including metallurgy, ferroalloys and energy.
According to market participants, after the 2024 decree, states began to impose their own taxes on minerals, which led to unequal taxes in different regions.
Due to the retrospective tax situation, the mining sector has incurred significant obligations, according to some estimates, the amount of fees amounted to 2 trillion rupees ($20.9 billion). NMDC, India's largest commercial iron ore mining company, estimates its potential tax liability in Karnataka at about 158 billion rupees, depending on the results of a government audit. The proposed retrospective mining Tax Law and related legislative changes.
According to the amendment, any claim for a mining tax is invalid if the state has not collected the tax before the new law comes into force. But taxes already collected by state governments before the law came into force will not be refunded, according to the law.
Amendment
