Coal Sector Embraces GST Council's Transformative Reforms
The GST Council's recent decisions mark significant changes for India's coal sector, cutting tax burdens and correcting duty discrepancies. These reforms promote self-reliance, benefiting both producers and consumers while reducing unnecessary imports and enhancing financial stability in alignment with Aatmanirbhar Bharat.
- Country:
- India
The Ministry of Coal has hailed the groundbreaking resolutions from the 56th GST Council meeting in New Delhi, bringing key changes to the coal taxation structure. According to a press release, these reforms are a major step towards self-reliance in the coal industry, favoring both producers and consumers.
Reforms result in notable tax reductions across coal grades, slashing the tax burden by Rs 13.40 to Rs 329.61 per tonne for coal, and benefiting the power sector with an average cut of Rs 260 per tonne. This translates into a 17-18 paise per kWh dip in generation costs.
Tax rationalization ensures fairness by replacing a flat Rs 400 per tonne cess, leading to uniform tax rates. As India moves towards self-reliance, imports are discouraged by aligning the tax incidence across grades, countering the previous advantage of imported coal. This aids in import substitution.
An 18% GST rate on coal eliminates the previously existing Inverted Duty Anomaly, freeing coal companies from accumulated tax credits, boosting liquidity, and preventing financial strain. Although GST rates increase, tax incidence on consumers drops, supporting the vision of a self-reliant India.
The GST Council's reforms promise balanced benefits for producers and consumers, fostering Aatmanirbhar Bharat by strengthening sectoral independence and enhancing economic stability.
(With inputs from agencies.)
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