Budget 2018: The big Union Budget 2018 is just a month away. In the budget the central government should come up with a few changes which will reduce the electricity cost further.
Budget 2018: The big Union Budget 2018 is just a month away. In the budget the central government should come up with a few changes which will reduce the electricity cost further, says FICCI. This budget will be crucial as it is the first one to be presented in Parliament following the implementation of Goods and Services Tax (GST). The pan-India tax regime has completely overhauled the tax structure in the country. Expectations are high from industry sector as well as layman. There will be an array of sectors which Modi government may look into so as to change the current scenario. One such issue is electricity cost in India. Notably, the long-awaited GST, India’s biggest tax reform, was rolled out on July 1.
“Since there is a shortage of domestic coal in India, power plants are compelled to meet the requirement through imports. Since there is no duty on electricity on the output side, any duty imposed on the procurement of coal would be a cost for power companies. The present duty structure is unintentionally increasing the cost of power generation and thereby increasing the cost of power, which is directly impacting the common man,” the Federation of Indian Chambers of Commerce and Industry (FICCI) said.
“It is recommended that BCD and IGST on coal imported for the usage in thermal power plants should be NIL. Without prejudice to the above, IGST @5% on coal shall be reduced to 2% to bring it in line with the levy of CVD being levied on the same goods under erstwhile indirect tax regime,” the industry body recommended in its pre-budget analysis.
However, the central government had already brought down GST on coal to 5 per cent from the previous tax incidence of 11.69 per cent, thereby making electricity generation cheaper, according to reports.
Earlier in July, the central government had also said that coal cess will contribute to the GST compensation fund, a corpus meant for compensating states for revenue losses in the wake of shifting to the new indirect tax regime. It has been learnt that the cess on coal has been continued at Rs 400 per tonne under the GST regime. “The Goods and Services Tax (Compensation to States) Act, 2017…notified on April 12, 2017 provides that coal cess, along with some other cess on pan masala, tobacco, aerated water would constitute GST Compensation Fund and the same would be utilised to compensate states for five years for potential losses on account of GST implementation,” the then Power and Coal Minister Piyush Goyal had said this in a written reply to the Lok Sabha. After five years, any amount left would be shared on 50 per cent basis between the Centre and States, the Union minister had said.