GST Council axes compensation cess on coal

GST Council axes compensation cess on coal

The reforms will lower the overall tax on grades G6 to G17

The Central government has stated that the Goods and Services Tax (GST) reforms will bring down the overall tax on coal and reduce the cost of power generation.

Previously, coal attracted 5 percent GST along with a compensation cess of Rs.400 per tonne.

However, the GST Council recommended axing compensation cess and an increase the GST rate on coal from 5 percent to 18 percent.

The reform will cut the overall tax on coal grades G6 to G17, which is in the range of Rs.13.40 per tonne to Rs.329.61 per ton, lowering the price of the coal.

Commenting on the move, the Ministry of Coal, stated, "The average reduction for the power sector is Rs.260 per tonne, which will reduce the cost of generation by 17 to 18 paise/kWh.”