{"id":72986,"date":"2025-06-20T14:53:30","date_gmt":"2025-06-20T09:23:30","guid":{"rendered":"https:\/\/piceapp.com\/blogs\/?p=72986"},"modified":"2025-06-20T14:53:35","modified_gmt":"2025-06-20T09:23:35","slug":"impact-of-gst-on-coal-industry","status":"publish","type":"post","link":"https:\/\/piceapp.com\/blogs\/impact-of-gst-on-coal-industry\/","title":{"rendered":"Impact of GST on Coal Industry"},"content":{"rendered":"\n
As the world’s largest source of electricity, coal continues to play a central role in energy security, particularly in developing economies. The duty on coal has undergone significant changes with the implementation of the Goods and Services Tax (GST) in India. <\/p>\n\n\n\n
This article discusses the impact of GST on coal industry by considering its economic value<\/a>, the pre-GST tax environment, amended GST rates and the general implications of the new tax system.<\/p>\n\n\n\n Being the largest source of electricity in the world, coal remains a key force behind energy security, especially for developing economies. However, the coal tax burden has dramatically changed with the implementation of the Goods and Services Tax (GST) in India.<\/p>\n\n\n\n Coal is one of the principal energy sources in India. It continues to be a vital component of sectors such as steel, cement and construction, which utilise it for thermal generation<\/a> and manufacturing purposes.<\/p>\n\n\n\n Furthermore, over 65% of India’s electricity is generated from coal. The domestic supply of coal in India during the 2022\u20132023 financial year was 794.96 million tonnes (MT), while imports were 186.06 MT.<\/p>\n\n\n\n India imports coal from coal plants in Australia, Indonesia, South Africa, the United States and Russia to supplement its energy requirements. Besides electricity production, coke of coal is vital in the steel and iron sector.<\/p>\n\n\n\n In the past, the location of steel and iron plants was based on the availability of coal plants since a lot of coal was required for production. Coal gas is also utilised for the production of thermal energy in different industrial processes<\/a>. Owing to its widespread usage, coal remains important to India’s industrial growth and energy security.<\/p>\n\n\n\n Before the implementation of GST, coal power generation was subjected to multiple indirect taxes, making it very costly. The taxes that it imposed were Excise duty under the Central Excise Act and Value-Added Tax (VAT) regime from individual states. Coal and coal-based products are generally taxed at a standard VAT rate ranging between 5% and 6%.<\/p>\n\n\n\n Clean Energy Cess was imposed to promote renewable energy initiatives<\/a>. Transport services attract a service tax of 15%, so the cost of tax rate incidence on coal was found to come out around 11\u201312% in the form of excise duties. Such multiple levels of taxation amounted to higher coal prices, influencing the costs of power generation and industrial units that utilised coal.<\/p>\n\n\n\n The introduction of GST substituted several indirect taxes with a more simplified tax system. The GST rates for products related to coal are as follows:<\/p>\n\n\n\nWhat is Coal?<\/h2>\n\n\n\n

The Economic Importance of Coal<\/h2>\n\n\n\n
Pre-GST Scenario for Taxes on Coal<\/h2>\n\n\n\n

GST Rates on Coal and its Related Products<\/h2>\n\n\n\n