Coal to contribute about Rs40,000 crore GST compensation cess: Piyush Goyal
New Delhi: The coal sector is likely to contribute about Rs35,000-40,000 crore by way of goods and service tax (GST) compensation cess in 2017-18, power minister Piyush Goyal said on Tuesday. The cess will go to the corpus meant for making up for state governments’ revenue losses from shifting to the GST regime.
Goyal said at a function here organised by the coal ministry to launch its ‘Saral Eindhan vitaran application’ (SEVA) that while the Rs400 per tonne cess on coal will continue to exist in the GST regime, the reduction in the GST rate on coal will be factored in by state electricity regulators while determining power tariff.
“The tax reduction will either reduce power tariff or will avoid the need for an otherwise required power tariff increase,” said the minister.
Under GST, the tax incidence on coal will come down from 11% now to 5%, excluding the specific cess. Coal at present has a central excise duty of 6% and a state value added tax of 5%. It is proposed to be placed on the 5% GST slab.
The minister also said that coal tariff rationalization has already lowered the power production costs and have helped generation companies to save about Rs3,000 crore by way of avoiding unnecessary transportation of the fuel.
The SEVA application allows one to know how much of coal of what quality has been dispatched to which power producer at what time. It is meant to increase transparency in coal supplies and will enable stakeholders to know if efficient power producers are getting sufficient fuel supplies. This will facilitate further rationalization of coal transport to the power plant, the minister explained.
Coal India chairman-cum-managing director S. Bhattacharya said that coal rationalisation is a continuous process and that SEVA will enable power generators to constantly monitor their cost of fuel for efficiency improvement.
Replying to a question, the minister said that an inter-ministerial panel will meet on Thursday to discuss the modalities of a new policy on auction of mines to private sector for commercial mining.