The government proposal to rationalise duty on different grades of coal like steam will help to save time on quality verification and dispute redressal among others, say analysts.
Finance Minister Arun Jaitley while presenting the budget 2014-15 today said that at present, coal attracts customs duties at different rates.
"I propose to rationalise the duty structure on all non-agglomerated coal at 2.5 per cent basic customs duty and 2 per cent CVD. Henceforth, anthracite coal, bituminous coal, coking coal, steam coal and other coal will attract the same duty," the Minister said.
"This will eliminate all assessment disputes and transaction costs associated with testing of various parameters of coal," he added.
The Finance Minister during the budget speech also announced the government's proposal to reduce customs duty on coal tar pitch from 10 per cent to five percent.
The rationalisation of duty on all coal varieties would help avoiding the time spent on quality verification and associated disputes and so can be seen as a simplification for business, according to Kameswara Rao, Leader (Energy, Utilities Mining) PwC India.
"Any saving on primary inputs will, although small in this case, benefit the producers and consumers," he said.
While coking coal is used by integrated steel companies, steam coal is used by thermal power generators.
Anthracite and Bituminous coal, depending on grade and composition, are used by thermal power and steel companies.
While according to Kuljit Singh, Partner, Ernst & Young streamlining of the duties on coking coal and steam coal is likely to encourage higher quality imports "and now the emphasis would be on the GCV adjusted prices of the coal imports while assisting.
