Coal: Cess increased to Rs 200 per tonne

Budget proposals

The following announcements have been proposed in the Union budget 2015-16:-

• Proposed to increases the Scheduled rate of Clean Energy Cess levied on coal, lignite and peat to Rs 300 per tonne from Rs 100 per tonne. The effective rate of Clean Energy Cess is being increased to Rs 200 per tonne from Rs 100 per tonne.

• Proposed to reduce the tariff rate of basic customs duty on bituminous coal to 10% from 55%.

Stocks to watch

Coal India

Outlook

Government has proposed to increase Cess for the second time in a row on coal to Rs 200 per tonne, a move which could raise power tariffs while strengthening India’s position at upcoming global climate change negotiations. In his maiden budget in July 2014, Arun Jaitley increased it to Rs 100 per tonne from Rs 50 per tonne.

The cess is collected as National Clean Energy Fund (NCEF) and is disbursed for renewable energy based initiatives and power projects. The additional cess would fetch Rs 12,000 crore annually in the NCEF pool. The total amount in NCEF till date is close to Rs 40,000 crore.

Budget 2015: Complete Coverage