Taxation on natural gas remains key to increasing the use of natural gas in the economy, and the government is ‘cautiously optimistic' about bringing the fuel within the fold of the Goods and Services Tax (GST) regime in 2024-25, Petroleum Secretary Pankaj Jain said on Wednesday.
Speaking at an online seminar on India’s natural gas and LNG sectors by the International Energy Agency (IEA) and the Petroleum Ministry, Jain said bringing natural gas under the ambit of the GST regime would accelerate the shift towards natural gas.
“One big challenge for us continues to be the taxation on gas. Domestic taxes on natural gas are still a work-in-progress. That is affecting the use case for natural gas,” Jain said.
He said the government is optimistic about cracking the GST issue in the current year. “We are a federal country. So, it involves negotiations with states and persuading them, and bringing them on board. It is something we are working on. We are cautiously optimistic that we should be able to come up with some kind of resolution around this in 2024-25. If we are able to do that, you will find that the switch from less clean fuels to natural gas starts to make economic sense, and not just moral sense,” he stressed.
While he didn’t give a timeline, the Secretary said the government is working on it. “It is something which we anticipate. We should be able to make substantial progress during the course of the year,” Jain said.
Natural gas is currently outside the ambit of GST, and existing legacy taxes—central excise duty, state VAT, central sales tax—continue to be applicable on the fuel.
Terming taxation as the final element yet to fall into place, Jain said all the other elements, including infrastructure, distribution, and pipelines, are in place.
India has set a target of raising the share of natural gas in the country's primary energy basket to 15 per cent by 2030, up from the current 6.7 per cent.
Source: Business Standard
