Coal tax at 5% in GST will bring down power tariffs: Goyal

Lauding the Goods and Services Tax (GST) Council's decision to tax coal at the lowest rate of 5 per cent, Coal and Power Minister Piyush Goyal on Friday said the move will allow power distribution companies (discoms) provide electricity at affordable rates.

Coal is currently taxed at 11.69 per cent.

"The entire GST regime is designed to help bring down costs all over the country and aims at one nation, one tax to reduce corruption," Goyal said at a briefing here on the progress made in rural electrification.

"I am happy that the GST Council decided to keep coal in the 5 per cent tax slab. Coal sector will benefit significantly which would help discoms provide power at affordable rates. It will help bring down costs," he added.

Besides, Goyal, who also holds the New and Renewable Energy and Mines portfolios, said the higher tax of 18 per cent levied on solar modules will not impact solar tariffs.

"Tariffs for projects vary from project to project. The rise will be compensated by the decline in corruption and operational difficulties," he said in this regard.

The GST Council concluded its two-day meeting in Srinagar on Friday after deciding on a four-slab tax rate for services along with the novel concept of input credit for goods used. Earlier it decided on the fitment of 1,211 goods items and has deferred a decision on the remaining six categories for its next meeting slated here for June 3.

Goyal also said the demand for power in India has grown by 6.5 percent in the last three years and the power generation is also on a continuous rise.

"Nowadays, its 150 gigawatt (GW) against 130 GW of electricity generated in summer months. Overall, we have grown at 6.5 percent in the last three years. This is after huge energy efficiency gains. If the factor is 3 percent of gains, then demand would have been 9.5 percent," he said.

The minister also briefed the media on the progress of the government's rural electrification programme -- Deen Dayal Upadhyay Gram Jyoti Yojna -- to bring power to 18,452 unelectrified villages by 2018.

He said: "In all, 13,500 have been electrified till now and around 3,997 are remaining."

He further said that implementation of power projects in Jammu and Kashmir is difficult as losses in electricity is high. The scheme has also not been implemented in the left-wing extremism affected areas of Odisha and Assam.

--IANS

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