: Monday, 22 September 2025 2:13 pm
New Delhi . According to a statement released by the Ministry of Coal on Monday, GST 2.0 reforms have led to significant changes in the coal sector tax structure, which will benefit both the producers of fossil fuels and consumers.
According to the major decisions of the 56th GST Council meeting, the compensation cess of Rs 400 per tonne on coal has been removed.
In addition, the GST rate on coal has been increased from 5 percent to 18 percent.
According to the ministry, the impact of new improvement on coal pricing and power sector has emerged as a decrease in total tax load, as G6 to G17 coal grades have seen a decrease of Rs 13.40 per tonne to Rs 329.61 per ton. The average reduction for the power sector is around 260 per ton, which shows a decrease of 17–18 paise per kWh in production costs.
Rashing the tax load in coal grades ensures just behavior.
The Ministry gave an example that the tax load on G-11 non-coaling coal produced by Coal India Limited was 65.85 percent, while it was 35.64 percent on G2 coal. With the removal of cess, now the tax load on all categories has been similar to 39.81 percent.
Giving information, the ministry said that under these reforms, the inverted duty discrepancy has also been removed. Earlier, coal was applied 5 percent GST, while input services used by coal companies applied 18 percent. Due to this inequality, due to the lower output GST liability of coal companies, there was heavy accumulation of unused tax credit in their accounts.
Due to lack of refund, this amount continued to increase and valuable funds were blocked. Now, unused amount can be used to pay GST tax liability in the coming years, which will help block liquidity free and coal companies will help reduce the damage caused by the accumulation of unused GST credit and increase financial stability.
The ministry said that GST reform is expected to have a positive impact on the coal sector with strengthening India’s self -reliance, supporting producers, benefiting consumers.
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Web Title-GST 2.0 will benefit bot fossil fuel producers and consucers.