With the GST Council deciding to keep coal in the lowest tax slab of 5 %, thermal power tariffs are likely to come down. The tax rate has been finalised at 5% on coal as against the current tax incidence of 11.69% at the GST Council meeting held in Srinagar on Friday. The GST regime is expected to be rolled out from July 1.
Welcoming the decision, Power and Coal Minister Piyush Goyal said, “The GST regime has been designed to bring down the cost of goods…I am happy that the GST Council decided to keep coal in 5% tax slab. It will help bring down cost of power”. “With low rate, I hope that the power tariff will come down and electricity distribution companies will supply power to the poor at affordable rates”, the minister added.
Multiple layer of levies
However, an official in the Ministry of Power said the proportion of reduction in the tariff could not be ascertained now due to existing multiple layer of levies and charges on coal as well as on electricity.
At present, the average price of power of state-run NTPC Ltd is about Rs 3.20 per unit. But it varies from plant to plants based on fixed cost, levies and other charges, the official told DH. The minister also dismissed apprehensions that GST rates will have an impact on solar power tariff. The renewable energy tariff is already touching new lows, there was no need for lower taxes to encourage clean energy, said Goyal.
The GST Council had finalised the rates on various products, including renewable energy equipment (solar, wind and biomass) which has been kept in the 5% slab. Solar power tariff dropped to an all-time low of Rs 2.44 per unit which is below the grid parity price. Similarly, under the wind power auction for 1GW, the tariff dipped to Rs 3.46 per unit.
The new rates of solar power discovered in the auctions are even below the average rate of coal-based power produced by NTPC at Rs 3.20 per unit.
The minister said there will not be any negative impact on consumers due to imposition of higher tax on UPS and inverters as dependence on such equipment may not be much in the coming days as electricity distribution companies are working on providing uninterrupted power supply.