look news india
There are several tax structures currently in place on natural gas. Due to which the tax process becomes confusing. Apart from this, VAT is also imposed on natural gas in different states. In which Gujarat is at the forefront with 15 percent. Since natural gas is an important component for industrial units, it is proposed to take it out of this complex tax regime and bring it under the ambit of GST. A very important meeting of GST Council is going to be held in Jaisalmer, Rajasthan on 21st December.
A proposal has been submitted by the Petroleum Ministry to the Union Finance Ministry to include natural gas in the ambit of GST. After the presentation of the Petroleum Ministry in this regard, now this matter is likely to be raised in the GST Council meeting.
The Petroleum Ministry believes that the inclusion of natural gas in GST will benefit the petrochemical value chain. Currently, several tax structures are applicable on gas. Which varies from state to state. Natural gas is a major industrial feedstock. Besides, it is also used as fuel. It is also used in the production of general fertilizer urea. Natural gas is fed into capital-intensive crackers to produce olefin (ethylene-propylene), an input for many industries. Additionally, the Finance Ministry is reviewing the windfall tax, which is currently levied on petroleum products.
Why was it proposed to include natural gas in GST?
Companies that produce and use natural gas currently have to pay tax under two structures, central excise duty and VAT levied at the state level.
14 percent excise duty is imposed on CNG by the central government.
Multiple tax structures confuse the tax process and the benefit of input tax credit is also not available.
Gujarat tops the list of states levying VAT on natural gas at 15 per cent, while Maharashtra levies the lowest at three per cent.
