Various companies in the power sector are contesting for inclusion of power, coal and natural gas in the goods & services tax (GST) regime. Its inclusion will result in subsuming multiple taxes and accordingly will reduce the cost of power projects and the per-unit tariff.
The reason for such a demand is also for brining a parity of taxes on domestic coal which is at 27-28 per cent . Whereas , domestic natural gas attracts taxes at 19 per cent.
It is estimated that a GST rate of 18 per cent for the power sector could result in 15-20 per cent reduction in retail tariff. Further, a cut in power cost will also improve payment by end-consumers and reduce incentive for theft and losses. This will also help distribution utilities to reduce their problem of revenue deficit as well.
It must be known that the government is planning to put electricity in the exempted category of goods under GST regime. But , if it is included in GST then it will reduce the burden of tax on the ultimate consumers of electricity. It is pertinent to note that the inclusion of power and coal sectors in GST regime will result in lowering of bulk power, retail tariff and support the Make In India initiative as well.