The petroleum industry
has urged the government for the inclusion of natural gas in the Goods and
Services Tax (GST) regime in order to meet the goal of a gas-based economy and
increase its share in India’s energy market.

Currently, taxes like
central excise duty, state VAT and central sales tax are applicable on natural
gas as it is outside the ambit of GST.

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The Federation of India
Petroleum Industry (FIPI) submitted its pre-budget memorandum to the finance
ministry. It sought rationalization of GST on transportation of natural gas
through pipeline, as well as on re-gasification of imported LNG, to reduce
the cost of the environment-friendly fuel, as reported by PTI.

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The government has set a
target to increase the share of natural gas in India’s primary energy basket to
15% by 2030, from the current 6.2%. Increasing the use of natural gas will cut
fuel costs as well as reduce carbon emission, helping the nation meet its
COP-26 commitments.

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FIPI in its statement said,
“Non-inclusion of natural gas under the GST regime is hurting natural gas
prices due to stranding of taxes in the hands of gas producers/suppliers and is
also impacting natural gas-based industries due to stranding of legacy taxes
paid on it,”

In some states value
added tax or VAT levied on natural gas is very high; Andhra Pradesh levies
24.5% tax, Uttar Pradesh 14.5%, Gujarat 15% and Madhya Pradesh 14%.

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FIPI said that the
inclusion of natural gas in GST is critical to providing uniform taxation and
to encourage its free trade across the country without any tax anomalies. This
is one of the key preconditions for the growth and development of a gas
exchange in the country.

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Finance Minister Nirmala Sitharaman will present the Union Budget 2022 in Parliament on February 1 at 11 am.