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The central government has issued a circular, emphasising that states do not possess the authority to impose taxes or duties on electricity generated from any source, be it coal, hydro, wind, or solar. Such levies are deemed illegal and unconstitutional. The Union Ministry of Power clarified that certain state governments had imposed extra charges on electricity generation, disguising them as development fees or funds. According to the ministry, the power to impose taxes or duties is explicitly outlined in the VII Schedule. Entries 45 to 63 of List-II in the VII Schedule delineate the states' authority to levy taxes or duties. Any taxes or duties not specified in this list cannot be imposed by state governments, as residual powers lie with the central government. Entry 53 of List-II permits states to tax the consumption or sale of electricity within their jurisdiction. However, this does not extend to taxing the generation of electricity. Since electricity generated in one state might be consumed in another, no state has the jurisdiction to levy taxes or duties on residents of other states. Article 286 of the constitution prohibits states from imposing taxes or duties on the supply of goods, services, or both, if the supply occurs outside the state. Additionally, Articles 287 and 288 prevent the imposition of taxes on the consumption or sale of electricity used by the Central government or sold to the Central government for its consumption or that of its agencies. Considering these constitutional provisions, no state can levy taxes or duties on the generation or interstate supply of electricity under the guise of additional charges or fees, regardless of the source?whether thermal, hydro, or renewables. The central government has instructed states to promptly eliminate any form of tax, duty, or cess imposed under the pretence of development fees or funds on electricity generation from any source. This directive follows a prior communication from the Ministry in April, urging states not to impose taxes or duties on electricity generation, especially from hydro projects.