The Union government, which is planning a major policy push to raise the share of natural gas in India’s energy mix from the current level of 6.2% to 15% by 2030, is considering a proposal to bring natural gas within the ambit of the Goods and Services Tax (GST) a move that will make it cheaper for both industrial and domestic use, two officials aware of the matter said.
Levies on natural gas vary from state to state, ranging as high as 24%, a major deterrent to making it a people’s fuel. The ministry of petroleum and natural gas (MoPNG) has proposed to bring natural gas under GST to have a uniform tax rate across the country. The matter is under consideration, the officials said, requesting anonymity.
Petroleum secretary Tarun Kapoor confirmed the development. “There is a demand from the industry [to impose GST on natural gas], which is also supported by the MoPNG. But, then it has to go to the GST Council,” he said, referring to the GST body comprising state and central representatives.
The two officials mentioned above said gas transportation and state-specific value added tax (VAT) on natural gas are two major components that make natural gas costly. Gas, which is bought at the cost of $1-1.5 million metric British thermal unit (mmBtu) and has a landed cost of around $3 per unit, becomes $8 per unit for customers, they said.
Petroleum products such as crude, diesel, petrol, natural gas and aviation turbine fuel (ATF) are awaiting the GST Council’s approval to be included under the GST net. As these products are major revenue earners for some states, they want their individual freedom to levy VAT as per their financial requirements.