Demand to bring natural gas under GST.
According to the Federation of Indian Petroleum Industry (FIPI), bringing natural gas under the ambit of GST will have a positive impact, promote fuel usage and will not be a problem arising due to various types of taxes.
Questions raised on higher VAT being imposed in states
In the memorandum submitted before the budget to the Finance Ministry, FIPI said that VAT on natural gas is very high in various states. It is 14.5 percent in Uttar Pradesh and Andhra Pradesh, 15 percent in Gujarat and 14 percent in Madhya Pradesh. It states, “Since the gas-based industry does not get the benefit of tax credit on VAT, the cost of production of the concerned industrial customers rises and it has a negative impact on the economy.”
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According to FIPI, bringing natural gas under GST will have a positive effect, promote fuel usage and will not be a problem arising due to various types of taxes. The Prime Minister has set a target to increase the share of natural gas in total energy from the present 6.2 percent to 15 percent by 2030. Increased use of natural gas will reduce fuel costs. Also, there will be a reduction in carbon emissions. This will help the country to fulfill its COP (Conference of Parties) -21 commitments.
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At the same time, FIPI has also sought to rationalize GST on transport service through natural gas pipeline. Currently, GST on services related to transportation of natural gas through the pipeline is 12 per cent (with input tax credit benefit) and 5 per cent (without input tax credit).