GST on Coal Raised to 18 per cent, Compensation Cess Removed

08 Sep 2025 CW Team

According to a statement from the Union government, the move is unlikely to impact electricity prices, as the tax adjustment is designed to be revenue-neutral for buyers. The removal of the cess is expected to offset the increased GST, ensuring minimal change in net costs.

Industry leaders and analysts echoed this view. Sharad Mahendra, Joint MD and CEO of JSW Energy, said the decision would lower fuel costs in thermal power generation, especially where domestic coal is used.

“This will help reduce the base load power cost across the country and strengthen the financial position of distribution companies (discoms),” he said.

Vikram V, Vice President and Co-Group Head at ICRA Ltd, called the development positive for the power sector, noting that it would cut generation costs for coal-based plants.

“The change is expected to lower electricity supply costs for discoms by roughly Rs 0.12 per unit, given that coal-based capacity accounts for nearly 70 per cent of total power generation in India,” he said.

JM Financial Institutional Securities added that players in eastern and central India, who are more dependent on coal, would particularly benefit. The net impact is likely to be neutral or slightly positive, as input tax credit (ITC) will offset the higher GST, translating into a potential industry-level saving of Rs 5–10 per tonne, assuming 15 per cent coal usage.

Despite the overall positive outlook, power sector stocks saw mixed trading. On Thursday, Coal India Ltd closed flat, while NLC India, Tata Power, and JSW Energy dipped by over 1 per cent.

In a set of FAQs issued to clarify the rate rationalisation, the government explained:

“Earlier, coal attracted 5 per cent GST plus a Rs 400 per tonne compensation cess. The new structure merges the cess into GST, with no additional burden imposed on end users.”

This reform is viewed as part of the government’s broader aim to streamline tax structures, enhance transparency, and ease compliance while supporting the financial health of the power sector.

The Goods and Services Tax (GST) Council has approved a hike in the GST rate on coal and lignite from 5 per cent to 18 per cent, while simultaneously removing the additional compensation cess of Rs 400 per tonne, previously levied at 40 per cent. The decision, taken on 3 September, is expected to rationalise the tax structure without raising the overall cost burden on power producers or consumers.According to a statement from the Union government, the move is unlikely to impact electricity prices, as the tax adjustment is designed to be revenue-neutral for buyers. The removal of the cess is expected to offset the increased GST, ensuring minimal change in net costs.Industry leaders and analysts echoed this view. Sharad Mahendra, Joint MD and CEO of JSW Energy, said the decision would lower fuel costs in thermal power generation, especially where domestic coal is used.“This will help reduce the base load power cost across the country and strengthen the financial position of distribution companies (discoms),” he said.Vikram V, Vice President and Co-Group Head at ICRA Ltd, called the development positive for the power sector, noting that it would cut generation costs for coal-based plants.“The change is expected to lower electricity supply costs for discoms by roughly Rs 0.12 per unit, given that coal-based capacity accounts for nearly 70 per cent of total power generation in India,” he said.JM Financial Institutional Securities added that players in eastern and central India, who are more dependent on coal, would particularly benefit. The net impact is likely to be neutral or slightly positive, as input tax credit (ITC) will offset the higher GST, translating into a potential industry-level saving of Rs 5–10 per tonne, assuming 15 per cent coal usage.Despite the overall positive outlook, power sector stocks saw mixed trading. On Thursday, Coal India Ltd closed flat, while NLC India, Tata Power, and JSW Energy dipped by over 1 per cent.In a set of FAQs issued to clarify the rate rationalisation, the government explained:“Earlier, coal attracted 5 per cent GST plus a Rs 400 per tonne compensation cess. The new structure merges the cess into GST, with no additional burden imposed on end users.”This reform is viewed as part of the government’s broader aim to streamline tax structures, enhance transparency, and ease compliance while supporting the financial health of the power sector.

Infrastructure Urban

07 Nov 2025

Welspun Enterprises Wins 910 MLD Panjrapur WTP Contract

Welspun Enterprises (WEL), the infrastructure and energy arm of Welspun World, has secured a major contract from the Brihanmumbai Municipal Corporation (BMC) to design, build and operate a 910 million litres per day (MLD) Water Treatment Plant (WTP) at Panjrapur, Maharashtra.Valued at approximately Rs 31.45 billion, the project encompasses end-to-end civil, mechanical, electrical and instrumentation works, including the construction of a treated water sump and pumping station. Of the total value, nearly Rs 11.56 billion is allocated to Operations & Maintenance (O&M), with an additional..

Infrastructure Energy

07 Nov 2025

Mitsubishi Power Wins Boiler Upgrade Contract for O Mon 1 Plant

Mitsubishi Power, a power solutions brand of Mitsubishi Heavy Industries, (MHI), has been awarded a contract to support the oil-to-natural-gas fuel conversion at the O Mon 1 Thermal Power Plant in Can Tho, southern Vietnam. As the OEM of the plant’s existing boiler, Mitsubishi Power will supply key equipment—including new gas burners—and implement a selective catalytic reduction (SCR) system to reduce NOx emissions and help the plant meet stricter environmental standards.The O Mon 1 facility includes two 330 MW units that commenced operations in 2009 and 2015, with all major equipment or..

Equipment

07 Nov 2025

Liebherr’s 10,000th XPower Wheel Loader Joins BERGER’s Fleet

BERGER Rohstoffe GmbH has welcomed the 10,000th Liebherr XPower wheel loader to its operations at the Schlag granite quarry in Passau. The milestone machine, officially handed over at Liebherr’s Bischofshofen plant in May 2025, underscores the long-standing partnership between BERGER, Liebherr, and the Beutlhauser Group. Equipped with Liebherr’s signature power-split travel drive, the new L 580 XPower is already delivering strong results under demanding quarry conditions.At the Schlag quarry, BERGER Rohstoffe processes approximately 200,000 tonnes of Bayerwald granite annually into high-qu..