Consumers pay Rs 25,000 crore price for high coal tax, keeping power out of GST

Petrol and diesel are not the only sources of energy for which consumers are paying through their nose because of high taxes. A myriad of taxes and levies on coal, which accounts for 55% of electricity generation, and non-inclusion of electricity in GST regime is costing power consumers upwards of Rs 25,000 crore a year.

In 2018-19, complete data for which from Office of Coal Controller and CEA is available, power consumers – both industrial and domestic – paid 26 paise per unit for taxes on coal.

Coal, which is the primary input for thermal generation, is under GST. But electricity, the end product, is not. Since coal producers cannot claim input tax credit, they add all taxes to the cost of power, which ultimately goes to keep consumer tariffs high.

The levies and charges represent a mark-up of between 85% and 94% of the basic price of coal. Even after disregarding royalty, which goes to states where coal is mined, the remaining levies represent a mark-up of 75% over the basic price and directly impact the cost of power.

ET Energy World
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