GST Reforms Power India's Coal Sector Towards Self-Reliance

The recent decisions of the 56th GST Council meeting in New Delhi have been met with approval by the Ministry of Coal. The reforms, which have adjusted the tax landscape of the coal sector, are hailed as key steps towards achieving greater self-reliance in coal production and consumption.

Among the prominent changes is the elimination of the Rs. 400 per tonne GST compensation cess formerly levied on coal, paired with an increase in the GST rate from 5% to 18%. Such measures are projected to notably lessen the total tax burden for coal producers and consumers alike, with specific coal grades seeing a reduction in cost per tonne, subsequently influencing cheaper power generation costs.

The Ministry emphasized how these reforms remove inequities in tax incidence, where previously a uniform cess unfairly penalized low-grade coal. This adjustment aligns taxation more equitably across all coal categories, fostering a competitive edge for domestic coal against imports, a vital element of the Aatmanirbhar Bharat initiative. The reforms also correct an inverted duty structure, providing financial relief and promising a positive impact on the sector overall.

(With inputs from agencies.)