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Explained: Why energy MNCs want natural gas to come under GST

Experts have argued that bringing natural gas under the GST would lead to a reduction in the cascading impact of taxes on industries such as power and steel, which used natural gas as an input.

Written by Karunjit Singh , Edited by Explained Desk | New Delhi | Updated: October 29, 2020 8:43:02 am
Explained: Why energy companies want natural gas to be under GSTThe inclusion of natural gas under the GST regime would do away with the central excise duty and different value added taxes imposed by states.

Global energy majors are bullish on the growth of natural gas usage in India and have called on the government to bring natural gas under the GST regime at the India energy Forum being held this week.

Currently petrol, diesel, aviation turbine fuel, natural gas and crude oil fall outside India’s Goods and Services Tax (GST) regime. Government officials have also indicated that the government is considering bringing natural gas under the ambit of the GST regime.

“GST was a welcome federal initiative to ease trade and it will be good if natural gas is included in that,” said Bernard Looney, CEO of British Petroleum noting that under the current regime India was a complex market, as it has 29 markets within itself (because of differences in state laws).

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Why is it important to bring natural gas under the GST regime?

Experts have argued that bringing natural gas under the GST would lead to a reduction in the cascading impact of taxes on industries such as power and steel, which used natural gas as an input. The inclusion of natural gas under the GST regime would do away with the central excise duty and different value added taxes imposed by states. This would lead to an increase in the adoption of natural gas in line with the government’s stated goal to increase the share of natural gas in the country’s energy basket from 6.3% to 15%.

Investing in renewable energy capacity was a key focus for CEO of Total, Patrick Pouyanné who noted that the company was aiming to expand its renewable energy portfolio in India to 6 GW. Pouyanne noted that he expected energy consumption in India to grow significantly.📣 Follow Express Explained on Telegram

“The energy consumption per capita in India is just 30 per cent of the world average. So you have a huge potential with a very dynamic young population and that is a key priority of the Indian government…,” he said

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