(T.E.T)
The government should bring natural gas under the Goods and Services Tax (GST) regime to realise Prime Minister Narendra Modi’s vision for a gas-based economy and raising the share of the environment-friendly fuel in India’s energy basket, an industry body that represents the likes of Reliance Industries as well state-owned firms, has said. Natural gas is currently outside the ambit of GST, and existing legacy taxes — central excise duty, state VAT, central sales tax — continue to be applicable on the fuel.
In its pre-Budget memorandum to the finance ministry, Federation of Indian Petroleum Industry (FIPI), which boasts of members from across the oil and gas spectrum, also demanded rationalization of GST on transportation of natural gas through pipeline as well as on re-gasification of imported LNG to help bring down cost of the environment friendly fuel. The Prime Minister has set a target of raising the share of natural gas in the country’s primary energy basket to 15 per cent by 2030, from 6.2 per cent currently. Greater use of natural gas will cut fuel cost as well as bring down carbon emissions, helping the nation meet its COP-26 commitments.
“In order to promote gas-based industry in India, it is suggested that suitable amendment/clarification may be made so that activity of regasification attracts 12 per cent GST on job work basis,” it said.
FIPI also sought rationalisation of GST rate on services of transportation of natural gas through pipeline by levying 5 per cent tax with input tax credit (ITC) benefit instead of present 12 per cent. “This will lead to lower cost of transportation of natural gas and will help in promotion of cleaner sources of energy for power and CNG where ITC of GST paid on transportation of natural gas is not available,” it said.
