Sanjeev Agarwal

There is lot of discussion, debate, deliberation is going since last one year and after implementation of GST, as GST has  affected vast society which hitherto was out of tax ambit and  certain business were being carried out without  paying tax in cash .

After demonetarization GST was another major booster of government for digitalization, increasing tax base and covering all sectors in ambit of Taxation. Definitely this will take a lot of time to adapt these major changes by  people of india  and set there mindset to  cope  with these changes , since these are first time in the history  of India such courageous ,bold decision has been taken to curb black money generating from sector which were untouched  from status or due to some loopholes could not come under preview of .

Due to GST rate of various items and services has gone up , service tax which were at highest slab was 15% gone up to 18% , certain item which were in bracket of lower tax pre GST has came under bracket of higher rate due to increase input cost output cost has increase which is ultimately increasing end user ,particularly those sector which are not eligible for Input tax credit .

GST Impact on Coal cost

But one power sector is most beneficial sector after implementation of GST as coal cost which consist of more than 90 % of input cost came down drastically, as there is substantial reduction of tax Post GST, can be understand better from following comparison:

Pre GST Post GST
Sr no Particulars Qty Rate Value Qty Rate Value
           1  Basic Price          1         1,000         1,000          1         1,000          1,000
           2  Breaking Charges-Limited to 100mm              79              79              79                79
           3  Surface Trans.Charges            116            116            116             116
           4  Washery recovery charges            630            630            630             630
           5  Royalty @14% (on basic Price)            140             140
           6  MMDR Royalty-Central [email protected]% on Royalty                 3                  3
           7  MMDR Royalty-state [email protected]% on Royalty              42                42
           8  Stowing Excise Duty              10              10
           9  Total Assessable Value(A)         2,020          2,010
         10  Central Excise [email protected] 6% on (A)            121            121                 –
         11  Clean Environment Cess            400            400            400             400
         12  Total Value         2,541          2,410
         13  [email protected]%            127             120
         14  Gross Value         2,668          2,530
 Total tax (8+9+13)            258             120

From above table there is clear that if Basic price of coal is 1000/  there is saving of Rs 138/ pmt in coal cost  due to removal of excise duty  in GST regime.

Effect of coal cost reduction in per Unit Variable cost :

Thus due to reduction of coal cost as above in GST regime there effect on per unit cost of electricity can be compare as below between  Pre GST and Post GST

Sr no Particulars UOM Pre GST Post GST
1 Per KG cost of coal Rs 2.67 2.53
2 Coal Required for Generation of One Unit  Kg 0.6 0.6
3 Per Unit cost of coal 1.60 1.52
4 Saving in Per unit generation cost 0.08

Show there is reduction in cost of generation due to tax impact in GST regime, this will reduce help Power generation companies bringing their cost with in Power Purchase agreement as cost to be charge will decrease and this will help in keeping cost with approved cost.

 Thus GST is boon for power sector.

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March 2021