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Coal Consumers to save as much as ₹ 6,000 crores in taxes due to the GST

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Kolkata – Coal consumers are expected to benefit from GST with as much as ₹ 6,000 crores savings from the taxes. This is primarily because of the reduction in taxes post the implementation of the goods and services tax.

In the pre-GST era there used to be an excise duty of 6%, an excise duty of ₹ 10 per tonne of coal production, value added tax of 5% on the intra state sale and a central sales tax of 2% on the interstate. After the GST came into practice, all these taxes were clubbed, and now only a 5% tax is being charged to the customers.

A coal official confirmed that on an average reduction in the rate of local sales is about 5% and on the inter-state sales the reduction in tax is approximately 3%. This reduction is expected to give a benefit to the customers by as much as ₹ 6,000 crores.

Though there are a couple of flaws such as output that is the coal that is produced is taxed at a lower rate whereas the inputs are being taxed at a higher rate. For instance, the coal is taxed at 5%, while the inputs are taxed at anywhere in the range of 18-28%. Thus the output is being taxed only at 5% but the input at a higher rate.

When asked if demonetization had any impact, the official confirmed that there was no significant impact as mostly all the transactions and payments happened through the online banking system.

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