At present, VAT is levied on CNG according to the central excise duty and different states. Instead, a direct VAT may reduce its value. Due to being cheaper, its consumption will increase and this will increase the volume of gas production companies. Due to these possibilities, shares of gas companies have registered an increase. At this time, CNG prices are half of the prices of petrol and diesel.
Shares of natural gas production and distribution companies rose 4 to 9 percent after the PM’s announcement of bringing natural gas under the GST regime and investing 7.5 lakh crore in the oil and gas sector of the country.
Natural gas is still expensive due to different taxes
At present, Central Excise Duty, VAT and Central Sales Tax are levied on natural gas. VAT rates are different in different states. It is 14 per cent in Madhya Pradesh, 14.5-14.5 per cent in UP and Andhra Pradesh and 15 per cent in Gujarat. Central Excise duty of 14 per cent is levied on CNG and 5 to 24 per cent VAT in states.
If a VAT slab of 5 to 18 percent is applied on it, then its prices will decrease. Due to being cheaper, its consumption will increase and this will increase the volume of gas production companies. Due to these possibilities, shares of gas companies have registered an increase. At this time, CNG prices are half of the prices of petrol and diesel.
CNG will become cheaper due to GST
By coming under the purview of GST, companies will get input tax credit and this will reduce their cost. One benefit of reducing costs will be that companies will be able to sell more gas to the industry. Industry clients account for 70 per cent of Gujarat Gas’s customers. During the nine months of the financial year 2020-21, gas consumption in the country declined by 5.4 per cent to 45,124 million MMSCM. However, LNG consumption increased by 0.3 per cent. It accounts for 55 per cent of the total consumption of natural gas.
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