Business EconomyPosted at: Sep 7 2025 1:02AM


Sharp GST hike on Coal poses challenges for sectors like steel: FTCCI

Hyderabad, Sep 6 (UNI) While hailing the sweeping GST rate rationalisation as a “landmark step towards a simpler and more inclusive tax regime", the Federation of Telangana Chambers of Commerce and Industry (FTCCI) also raised its concerns on some key issues like the sharp GST hike on coal from 5 per cent to 18 per cent.
The sudden increase in GST on coal poses serious challenges for sectors like steel, cement, and aluminium, increasing energy costs and risking inflationary pressures, FTCCI President R. Ravi Kumar, Senior Vice President K.K. Maheshwari and vice-President Srinivas Garimella said in a joint press conference here.
They urged the Centre to rationalise the existing compensation cess on coal to offset the impact. Most of the manufacturing sector uses energy and even processing industry uses high amount of energy. So that will have some impact on the energy or gas prices, they informed and adding that will have little impact on energy cost.
To a question, they said due to increasing tax on coal, manufacturing process cost will go up.
Steel and energy cost, almost 15-20% of the cost is energy cost, they said it will have some impact and may be effect the building construction sector also. Steel has not been touched in terms of GST but indirectly, steel is going slightly up because of energy cost, they pointed out.



The Council’s decision to merge the 12% and 28% slabs into 5% and 18% categories marks a significant stride in the long-awaited structural simplification of India’s indirect tax system, they said and strongly reiterated their long-standing demand for a phased inclusion of petrol, diesel, natural gas, and ATF under the GST regime.
The continued exclusion leads to tax cascading and hampers competitiveness, particularly for energy-intensive industries and logistics, they said.
Now coupled with this GST rationalization, people pay less for food. "We expect the consumption to go up, not just in urban population, but even in rural population."
Consequently, they said “we are sure GDP will go up, and obviously manufacturing activity, all will have their own boost".

Though Finance Minister Nirmala Sitharaman said the government is going to lose around Rs 44,000 crore because of this process, they said she would perhaps sacrifice it for this rationalization.
But overall, we think this 44,000 crores will be offset very easily, because consumption will definitely declare this in a couple of months before Diwali.
Diwali will be followed by Christmas, followed by Pongal, they said.
Definitely, the festivities will be ahead, so we think consumption will go up, they added.
Mr. Mohd Irshad Ahmed, Chair of FTCCI’s GST and Customs Committee, said but government has embraced this risk very consciously, and it could be a risky gamble.
The GST council has taken this risk, embraced this risk consciously, and it is not because of the ‘Trump ballot’, he pointed out. The move to reduce GST on hotel accommodation (up to ₹7,500/day) to 5% without ITC was flagged as a concern, the FTCCI recommended dual-rate options that allow businesses to claim input tax credit, preserving the seamless credit flow that GST was designed to enable, they said. Offer optional higher GST rates with Input Tax Credit (ITC) for B2B transactions, especially in sectors like hospitality, to preserve the seamless credit chain and prevent input tax leakage, they added.
FTCCI reiterated that these reforms would enhance transparency, ease of doing business, and competitiveness across sectors, particularly manufacturing, exports, and infrastructure.
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