Input Tax Credits and Electricity Pricing Under India's GST Regime

A Thermal Power Generation Study

Abstract

The implementation of the Goods and Services Tax (GST) framework has brought about significant changes in India's power sector. This requires a thorough analysis of the tax impact on energy producers and consumers. This study uses a quantitative approach to examine the effects of the GST regime on the power sector, with a specific focus on coal-based thermal generation projects. Our analysis looks into the interaction between Input Tax Credit mechanisms, rationalized tax rates, and existing electricity regulatory frameworks. While the exclusion of electricity from the GST framework aims to simplify regulations, it has created disparities in the tax structure that need to be studied. Considering the changes in indirect taxation and the unique nature of the power sector, this study evaluates the impact of the GST regime on electricity pricing dynamics in India. The research identifies potential ways to reduce per-unit generation costs and investigates how tax efficiencies can lead to lower electricity tariffs for end consumers.