The Central induces West Bengal government to reduce its coal cess and also to increase the royalty like the other states.
The Centre has compelled the West Bengal government to cut current cess on coal, which is levied 25% on per metric tonne. The company earns about INR 9 billion from cess per year. While, the coal royalty varies from INR 3.50-6.50/MT, depending on different grades of coal. The central government also suggested to increase the royalty to 14%.
Although, other states have levied 14% royalty for all grades of coal, where cess is negligible, the West Bengal government is charging 25% cess. This cess is already more for each metric tonne compared to other states such as Jharkhand, Chhattisgarh and Odisha.
The West Bengal’s 25% cess has divided in two components – a rural employment cess of 20% and a primary education cess of 5%.
Also, there is zero cess on coal for other states, but they charge royalty, which is fixed by the Centre government and collected by states. However, the total rate of the state levy is higher in West Bengal.
Since West Bengal has the unique cess, the Centre did not hike royalty rates for the state since 1990s even as it revised to 14% for others in 2012. However, state continued non-committal to cutting off its one of the big sources of revenue.
In a recent meeting attended by Union Coal Minister Piyush Goyal, West Bengal Power Minister Sovandeb Chatterjee and the Adviser to the state’s Power Ministry Manish Gupta, Goyal suggested that West Bengal set up a five-member committee to look into the issues of high cess charged by it.
The suggested committee will be formed under the chairmanship of the state power secretary and include directors from Coal India. It will submit its report in four weeks.
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