It seems the power ministry may not succeed in convincing the finance ministry to reduce import duty on all forms of coal used in power plants to mitigate the impact of rising cost of imported coal on power sector.
Increase in the cost of imported coal has threatened the viability of several power generation projects in the country.The finance ministry may not heed to the demand of the power ministry as reducing import duty would mean a fall in the tax revenue of the government, which already faces high fiscal deficit.
Reports suggest that the finance ministry has already foregone Rs 2,000 crore of tax revenue by bringing parity in duty for import of all varities of coal.
In the union budget 2013-14, the finance ministry decided to bring a parity and imposed a duty of 4 per cent across varieties. Earlier, steam coal used to have zero basic custom duty (BCD) and 1 per cent countervailing duty. Import of bituminous coal, on the other hand, attracted a BCD of 5 per cent and CVD of 6 per cent, total 11 per cent duty. Now both carry four per cent duty two per cent each for BCD and CVD.”
The finance ministry reduced import duty on bituminous coal as it observed that a large part of power generation uses bituminous (high calorific variety).
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