NATURAL GAS UNDER GST

News - Officials have indicated that the government is considering bringing natural gas under the ambit of the GST regime

GST was a welcome federal initiative to ease trade and it will be good if natural gas is included in that. When Goods and Services Tax (GST), which amalgamated 17 different central and state levies like excise duty and VAT, was implemented in July 2017, five products - petrol, diesel, crude oil, aviation turbine fuel, and natural gas, were kept out of its purview for the time being.

This meant that gas users could not set off tax paid on inputs against those on the final product and tax on tax continued, disincentivising the use of the fuel

Why is it important to bring natural gas under the GST regime?

· Bringing natural gas under the GST would lead to a reduction in the cascading impact of taxes on industries such as power and steel, which used natural gas as an input.

· This would do away with the central excise duty and different value-added taxes imposed by states.

· This would lead to an increase in the adoption of natural gas in line with the government’s stated goal to increase the share of natural gas in the country’s energy basket from 6.3% to 15%.