Coal Ministry seeks rationalisation of coal cess

The Coal Ministry is looking to rationalize coal cess on the basis of grades, CNBC-TV18 learns that the ministry has written to the finance ministry to re-structure coal cess to ad-valorem from currently fixed cess. Coal Miners have to pay Rs 400 per tonne as coal cess which is utilized by the central government to compensate states on account of revenue shortfall under the Goods & Services Tax (GST).

This move comes on the back of industry concerns on fixed coal cess which is making coal mining expensive, also the next round of commercial coal auction is expected soon.

Ad-valorem basis of coal cess will reduce some burden on high-grade coal miners and also translate some benefit to consumers. “ The ad-valorem basis coal cess will be revenue neutral for the government and also help make the coal auction attractive as the prospective bidders have been seeking for this change from fixed to ad-valorem cess on coal,” said a source from the coal ministry.

CNBC-TV18 learns from government sources that the Ministry of coal is likely to issue tender for about 70 coal mines for the second round of commercial coal auction. The tender for auction is expected by the end of March and e-auction expected in the month of May 2021.

The Coal Ministry offered 38 coal mines for the first commercial coal mining auction, of which only 17 mines were auctioned in 2020. With energy transition towards cleaner sources of fuel globally, the Ministry of Coal is also looking to advance coal auction processes and enhance the production of coal.
Source: CNBC TV18