Policy & Govt

Why Should India Include Natural Gas In GST?

The central government has indicated that it may bring natural gas under the ambit of GST (Goods and Services Tax), earlier than expected. Presently, diesel, jet fuel, crude oil, and natural gas fall outside the GST ambit. However, several industry groups want gas to come under an indirect tax regime.

As per the Ministry of Petroleum and Natural Gas, world’s average natural gas share in the primary energy basket is about 24 percent. In India this share is just 6%, intending to increase it to 15%. Thus, natural gas as a fuel choice is on the rise world over.

Since 2014 and onwards, the Government of India is consistently taking initiatives, revamping existing policies and framing new ones, all working towards making India a sustainable, gas-based economy. However, the fact that Natural Gas is presently not covered under GST is a major bottleneck in this direction. Industry experts have also spoken in favor of bringing natural gas under GST. There is thus a unanimous demand in this direction. How is this possible?

The inclusion of natural gas under the GST regime would do away with the existing central excise duty and many folds of value-added taxes (VAT), which is imposed by states.

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