Impact of GST on Coal and its Consumers | H&R Block | Blog
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November 6, 2017
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November 21, 2017

Impact of GST rate on Coal

GST is one of the biggest reforms in India that was implemented from the 1st of July, 2017.  Before the implementation, it was assumed that GST would bring a positive change to the entire country and reduce the corruption by eliminating the rotation of black money in the Indian market. Whether you are a business owner, industrialist or an end-consumer, everyone is affected by the new taxation regime in one way or the other. Due to lack of clarity and understanding, people are still confused regarding the registration, e-filing, returns, Composition scheme, Input Tax credit and Reverse Charge mechanism and so on. The normal is still unclear to a lot of people dealing with the supplies of goods and services.

Despite the Government’s efforts of organising workshops, seminars. GST software introduction to educate the population of the country, people are hiring CA professionals for their tax-related calculations. Even the small businesses whose annual turnover is less than 75 lakhs have to hire tax professionals for the complex GST calculations. Coal mining is one such industry which needs clear information regarding the taxation after GST.

In this post, we discuss the impact of GST on coal consumers. Let’s take a look.

GST Rate on Coal

Coal is one of the cheapest fossil fuel available all around the world. It is widely used for the manufacturing of several materials including steel, electrify, cement and so on. The coal industry plays a crucial role in the Indian economy. After the implementation of GST, the coal rates have been decided by the GST Council, Finance Minister of India and of all the states.  However, it’s important to see whether the coal rates have been decreased or increased and how the coal consumers will be affected with the same.

Previous Tax Law on Coal

According to the previous taxation law and Central Excise Act, excise duty was charged on coal mining. The taxes were not only imposed by excise duty, but there were also some hidden costs such as transportation from one state to another. If the average VAT is calculated, coal was charged approximately 5-6% of the VAT. The same rate was charged on other products which were extracted out of coal. After the abatement, the coal was charged a tax rate of 6.8%.

GST Rate on Coal

GST is the biggest taxation reform in India which is levied on the goods and services. Businesses who are dealing with the supplies of goods and services have to get registered under the GST. There is a good news for all the coal producers as the Indian government has reduced the tax burden on coal up to 5%. In fact, the kerosene Oil and LPG have also been kept under the same GST rates. Along with the lower rates of LPG. It is expected that the prices of gas cylinders of LPG will also go down due to the cheaper logistics cost and lower tax rate.

Impact on Coal Consumers

Coal is the primary component in various industries required for the making of different products. Almost every industry all over the India uses coal. Due to the best railway networks, coal has been transported through trains. However, previously the transportation of coal from coal mines directly to the factories and industries in need is an expensive affair. It was due to the service tax charged on transportation services at the rate of 15%. After the GST implementation, the coal transportation rates have lower down up to 5% through trains, and thus the logistics cost has been decreased.  That’s the reasons the coal consumers are benefited after the implementation of GST. Hence, GST proves to be a better-regulated tax system for coal producers as well as the consumers.


The government has taken several steps to make people learn about the new taxation reform. To provide people with a simple way to handle GST, Government appointed certain GSPs to design a GST software that can help industries, small businesses as well as the companies to ease the complex GST calculations. You can also find various websites on the Internet designed for providing the latest GST news.  If you too are one of them who need most recent updates regarding the GST and GST software, contact GST software providers who can help you get the program installed to ease the entire taxation process.

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CA Ankita Mathur
CA Ankita Mathur
Ankita, a Big 4 alumna, is a tax expert at H&R Block (India) with vast experience in managing GST-related business services. An avid traveller, Ankita is a regular contributor to the CAclubindia and loves helping people understand about GST and helping companies be GST compliant.