A high-level government committee has recommended removal of excise duty on compression of natural gas for faster adoption of gas in the country. It also suggested that liquefied natural gas (LNG) imports for captive power plants be exempted from basic customs duty and called for the inclusion of natural gas under goods and services tax (GST).

 
The report submitted to the regulator earlier, holds significance given the energy supply crisis due to the ongoing West Asia conflict. Another significant recommendation states inclusion of natural gas under GST in a lower tax bracket, with full input tax credit. The committee said this would ensure uniform taxation, reduce cascading taxes, and promote interstate trade.

“To maximise benefits, input tax credit should also apply to sectors like power and petrochemicals, even if their outputs are outside the GST regime. Until then, states should be encouraged to reduce VAT on natural gas,” it added.

The committee also recommended extending the exemption from basic customs duty and social welfare surcharge on LNG imports to captive power plants and the city gas distribution (CGD) sector, in line with the treatment currently available for LNG used by power generation companies.

Meanwhile, PNGRB has instructed CGD entities to ensure natural gas pipeline connectivity for 19 priority geographical areas (GAs). During a recent meeting, CGD entities highlighted several issues including delay in the handing over of land, procurement delay for metering equipment and permission delays from statutory authorities like National Highways Authority of India (NHAI) and Petroleum and Explosives Safety Organization (PESO).

Source: Business Standard