Archive · 5 Sep 2025
GST Council Raises Coal Tax: Sectoral Impacts Unfold
The Indian government changed the tax on coal.
The tax (GST) went up, but another fee (cess) was removed.
This makes things easier for companies to pay the taxes.
For power companies, it might cost a little more.
Cement and steel companies should save money.
However, companies that make coke might have problems because of how the taxes work.
This could mean that some companies have to wait to get tax refunds.
GST Council raised coal tax from 5% to 18% and removed the compensation cess.
The changes aim to address distortions in the coal value chain.
Cement and steel manufacturers are expected to benefit from smoother credit flow.
Power generators may see a slight increase in coal costs.
Coke manufacturers face an inverted duty structure, causing cash flow problems.
- Who
- GST Council
- What
- Increased GST on coal, removed compensation cess
- When
- Announced at the 56th meeting; impacts unfolding
- Where
- India
- Why
- To streamline taxation, remove inefficiencies in coal value chain
- Policy Change
- GST on coal increased from 5% to 18%
- Cess Removal
- ₹400/tonne compensation cess on coal abolished
- Cement & Steel Impact
- Benefit from full ITC on coal; reduced costs
- Power Sector Impact
- Nominal cost increase; potential tariff adjustments
- Coke Sector Impact
- Inverted duty structure created; working capital issues
Sources
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