A change in GST rules by the Union government is set to lower electricity costs for 1.77 crore consumers in Madhya Pradesh. Here’s a breakdown of what this means for your power bill:
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Even though the GST on coal has increased from 5% to 15%, the overall price of electricity is expected to fall. This is because the government has scrapped a compensation cess of Rs 400 per ton of coal that was previously levied. For every ton of coal, the increase due to the higher GST is about Rs 390, but the removal of the Rs 400 cess results in a net price decrease of about Rs 10 per ton.
- Impact on Consumers: The price reduction is expected to be at least 20 paise per unit. For a consumer using 300 units of energy, this will result in a monthly saving of at least Rs 60.
- Wider Economic Impact: This change is projected to save consumers around Rs 160 crore per month or nearly Rs 1,920 crore annually.
When Will You See the Savings?
Despite the Centre’s intention for the benefits to be passed on immediately, consumers will likely not see the change on their bills for about three months. The savings will be reflected in the Fuel and Power Purchase Adjustment Surcharge (FPPAS), which is calculated based on the cost of power purchased two months earlier.
For example, a drop in coal prices in October will be reflected in the FPPAS for December. Therefore, consumers can expect to see the price reduction on their monthly bills starting in December.
