Government Committee Recommends Tax Reforms to Boost Natural Gas Adoption
Govt panel seeks excise duty removal on CNG, GST inclusion for gas boost
Business Standard
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A high-level government committee in India has proposed the removal of excise duty on compressed natural gas (CNG) and the inclusion of natural gas under the Goods and Services Tax (GST) to promote its use. These measures aim to encourage the adoption of CNG vehicles and improve energy supply amid ongoing geopolitical tensions.
- 01Removal of excise duty on CNG recommended to enhance adoption.
- 02Natural gas proposed for inclusion in GST with full input tax credit.
- 03Exemption from customs duty on LNG imports for captive power plants suggested.
- 04Recommendations aim to address energy supply issues due to West Asia conflict.
- 05CGD entities instructed to improve pipeline connectivity in priority areas.
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A government committee in India has recommended significant tax reforms to promote the use of natural gas, particularly compressed natural gas (CNG). The report, published by the Petroleum and Natural Gas Regulatory Body (PNGRB), suggests removing excise duty on CNG and including natural gas under the Goods and Services Tax (GST) at a lower tax rate with full input tax credit. This initiative is aimed at making CNG and liquid CNG (LCNG) more attractive to consumers and businesses, especially in light of the ongoing energy supply crisis linked to the West Asia conflict. The committee also proposed exemptions from basic customs duty on liquefied natural gas (LNG) imports for captive power plants and the city gas distribution (CGD) sector. These reforms are expected to ensure uniform taxation, reduce cascading taxes, and promote interstate trade. Additionally, CGD entities have been instructed to enhance natural gas pipeline connectivity in 19 priority geographical areas, addressing various operational challenges they face.
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These tax reforms could lead to lower fuel costs for consumers and businesses, making CNG vehicles more financially viable. This shift may also enhance energy security in India amid global supply challenges.
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