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|
|2||Breaking Charges-Limited to 100mm||79||79||79||79|
|4||Washery recovery charges||630||630||630||630|
|5||Royalty @14% (on basic Price)||140||140|
|6||MMDR Royalty-Central Fund@2% on Royalty||3||3|
|7||MMDR Royalty-state Fund@30% on Royalty||42||42|
|8||Stowing Excise Duty||10||10|
|9||Total Assessable Value(A)||2,020||2,010|
|10||Central Excise Duty@ 6% on (A)||121||121||–|
|11||Clean Environment Cess||400||400||400||400|
|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.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018