Centre to soon waive compensation cess on coal gasification: Report

The central government is considering waiving the Goods and Services Tax (GST) compensation cess of Rs 400 per tonne of coal, which is being used for gasification, as reported by Mint. Gasification is a process by which coal is turned into fuel gas. It is considered to be a greener way to consume fossil fuels. 

The report further added that the decision can be announced in the Union Budget 2023-24, the report added. The GST council will take the final decision. 

“For any player whether it is Coal India or someone else, Rs 400 (per tonne) extra gets added as GST compensation cess. If you gasify, you would make methanol and ammonia which can also be produced from natural gas and petroleum. There is no burden of the Rs 400 per tonne in feedstock for natural gas, then why are you putting the burden on this (coal)?" one of the officials aware of the matter told Mint.

Another official said that the coal ministry has proposed the waiver to the finance ministry and has received a positive response. 

The centre launched the National Coal Gasification Mission in 2020 and aims for 100 million tonnes (MT) of coal gasification by 2030. It had set aside Rs 4 trillion. 

"He [Union minister for Coal Pralhad Joshi] emphasized that this will boost production of synthetic natural gas, energy fuel, urea for fertilisers and production of other chemicals," the press release by the Ministry of Coal had said. 

After the removal of cess, the cost of producing methanol is expected to come down by Rs 800-900 per million tonnes. 

The Centre has also reportedly advised coal companies to appoint a nodal officer for gasification. Also, they must draft action plans for gasifying at least 10 per cent of their total coal production.