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The Ministry of Coal has welcomed the landmark decisions taken at the 56th meeting of the GST Council held in New Delhi, which have brought significant changes to the taxation structure of the coal sector. These reforms mark a transformative step towards AatmNirbharta in Coal and represent a balance
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FAQ :
The ₹400 per tonne GST Compensation Cess on coal has been removed, and the GST rate on coal has been increased from 5% to 18%.
The reforms are expected to lead to a substantial reduction in the overall tax burden, with decreases ranging from ₹13.40 to ₹329.61 per tonne for different coal grades. The power sector could see an average reduction of around ₹260 per tonne.
By removing the compensation cess, the reforms level the playing field, making Indian coal more competitive and curbing unnecessary imports, thus strengthening India's self-reliance (Aatmanirbhar Bharat).
The GST rate on coal has been raised to 18% to match the higher rates on input services. This resolves the previous disparity where coal companies paid less GST on output than on inputs, which led to accumulated unutilised tax credit.
The correction of the inverted duty structure releases blocked liquidity by allowing companies to use previously unutilised tax credits to pay GST liabilities, enhancing financial stability.
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