look news india
A very relieving news has come out from the Union Territory of Chandigarh for the general public and motorists who are troubled by the rising prices of petrol and diesel and the rising kitchen budget. Chandigarh Administration has announced a huge reduction in Value Added Tax (VAT) on natural gas with the aim of promoting green energy and curbing pollution. According to the official notification issued by the administration, the existing 12.5 percent tax slab on natural gas has been directly reduced by 7.5 percent to just 5 percent. After this big cut in tax rates, there is a strong possibility of a significant decline in the retail prices of Compressed Natural Gas (CNG) and Piped LPG (PNG) in the city.
This decision, notified by the Excise and Taxation Department of Chandigarh, will have a direct impact on the input cost of gas distribution companies. Till now, VAT was charged at the rate of 12.5% on the supply of natural gas in the city, due to which City Gas Distribution (CGD) companies had to add a higher tax burden on the retail sale of the fuel.
Reduction in tax rate to 5% will significantly reduce the per unit operating cost of gas companies. Energy sector analysts believe that companies will pass the benefits of this tax exemption directly to the end consumers. According to estimates, this step may reduce the retail price of CNG in Chandigarh by about Rs 2 to 3 per kg, while PNG coming to homes through pipes will also become cheaper per SCM (Standard Cubic Meter).
The most immediate and positive impact of this tax cut will be on commercial vehicles plying within the Tricity (Chandigarh, Mohali, Panchkula). Auto rickshaw drivers, taxi and Ola-Uber cab operators who fill CNG every day will have less daily expenses, which will increase their savings.
With this, there will be relief to thousands of families in urban areas who use piped natural gas (PNG) as an alternative to LPG cylinders for cooking. Due to reduction in PNG bill coming every month, the household budget of middle class families will be balanced to a great extent.
A major aspect of this policy decision of Chandigarh Administration is to protect the environment and motivate industries to adopt clean fuel. Many small and medium manufacturing units operating in industrial sectors use traditional fossil fuels like furnace oil, diesel or coal for energy, which become a major cause of air pollution.
Reduction in VAT on natural gas to 5% will make the use of piped natural gas more economically economical for industries. This will not only reduce industrial production costs but will also help in improving the overall Air Quality Index (AQI) of the city and reducing carbon emissions.
This public-friendly step of the Chandigarh administration can also create indirect pressure on neighboring states like Punjab and Haryana to reduce taxes. The Tricity region is contiguous; In such a situation, if CNG becomes cheaper in Chandigarh, then the drivers of Mohali (Punjab) and Panchkula (Haryana) will also turn to the pumps of Chandigarh for filling fuel. To remove this disparity in tax, neighboring states may also be forced to review the VAT rates on natural gas in the future. In the coming day or two, local gas distribution companies will formally announce the revised rates and start providing this cheap fuel to the consumers.