Relief For Households: Electricity Bills Set To Fall From This Month

Thanks to the GST reduction on renewable energy equipment, production costs are down, directly benefiting consumers.

Good news! Your electricity bill might be going down. Experts predict that due to the recent GST rate change, the price of one unit of electricity could decrease by about 10 to 14 paise. As production costs decrease for energy companies, consumers will directly benefit.

The GST on renewable energy equipment has been reduced from 12% to 5%. This will lower costs like plant construction, engineering, and procurement from 13.8% to 8.9%. As a result, electricity prices from renewable energy projects will decrease by 4-5%, saving about 11 to 14 paise per unit.

This will increase demand for Discoms and encourage corporate customers to use green electricity at affordable prices through open access. It will also boost the investment capacity of generating companies. However, some challenges may arise due to lower GST input credit for producers.

Experts say the total cost of new projects will decrease by 4-7%, and the return on equity for developers will increase by 100 to 200 basis points. This will positively impact coal-based power generation, which accounts for 73% of the country's total electricity production.

While the GST rate on coal has increased from 5% to 18%, the cess of Rs. 400 per ton has been removed. This could reduce coal-based power generation costs by over 10 paise per unit, varying based on coal quality. Overall, Discoms' financial burden will decrease, and people will enjoy cheaper electricity.

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