Tax on power almost doubled for commercial, industrial users

Maharashtra's government has nearly doubled the electricity tax for commercial users to raise ₹834 crore annually for solar pumps under the PM Kusum scheme.

MUMBAI: The state government has almost doubled the additional tax on the sale of electricity to commercial and industrial users (additional Tose), to meet its target to provide solar pumps to farmers across Maharashtra.

Tax on power almost doubled for commercial, industrial users

The decision, taken on Tuesday, comes as the state reels under a shortage of funds, thanks to welfare schemes that are draining the treasury. As a result, the Mahayuti government needs to raise additional revenue to help it meet its targets under the PM Kusum scheme, which provides solar pumps to farmers.

By increasing the tax on power to commercial and industrial users, by 9.90 paise per unit, the state will raise ₹834 crore per year. The government currently taxes these consumers at the rate of 11.04 paise per unit.

Government sources pointed out that the financial crisis in the state has deepened after freebies announced by the Mahayuti government in the run-up to last year’s assembly elections. Schemes placing a serious burden on taxpayers are the flagship Ladki Bahin Yojana, whose annual expenditure amounts to around ₹36,000 crore, and schemes that provide free power to farmers for agricultural pumps, pegged at ₹14,700 crore.

Alongside, the state is bound to execute state- and centrally sponsored schemes, such as PM Kusum. Under this scheme, the state has a target to set up f 5.5 lakh solar pumps by March 2026.

These pumps are being installed by state-run power distribution company Mahavitaran and Mahaurja, which is concerned with renewable energy. Until now, 4,23,510 solar pumps have been installed, with the installation of 1,26,490 pumps pending.

“For PM Kusum, the state government already generates ₹930 crore per year by charging 11.04 paise as the electricity tax. With an increase of 9.90 paise per unit, it will collect an additional ₹834 core. This will be applicable for two years. The overall tax collected from these consumers will be more than ₹3,591 crore for PM Kusum,” said an official.

Electricity expert Ashok Pendse said it was not fair to increase the burden on commercial and industrial consumers, who already pay higher tariffs than other users. “The state government recently claimed that electricity charges are falling in Maharashtra. On the other hand, they are increasing the burden on commercial consumers, who will feel the heat as their consumption of power is already high,” said Pendse.