- The government is considering including electricity in the goods and services tax (GST) framework.
- Manufacturers would be able to offset tax liability by using GST credit from their electricity expenses.
- The move aims to enhance competitiveness in the sector.
- Currently, power utilities include GST in electricity prices, causing a cascading effect on the manufacturing sector.
- The government is exploring the possibility of maintaining lower state electricity duties on integrating electricity into GST.
- The inclusion of electricity in the GST framework is expected to benefit coal-based power plants and serve as a pilot for extending GST to other fuels.
- Audit and consulting firms have been engaged to analyze the transition.
- The findings suggest that GST could potentially drive down electricity costs for businesses and reduce levy expenses.
- Setting an appropriate GST rate on electricity could be revenue neutral for the states and offer a more effective tax structure for the industry.
- The impact on different states and the domestic sector needs to be assessed.
- The inclusion of electricity in GST is politically sensitive but has potential benefits for the industry.
Source: a2ztaxcorp.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
