Indian prime minister Narendra Modi has said his government is committed to bringing natural gas under the goods and services tax (GST) regime. 

“We are trying to eliminate the cascading effect of different taxes on natural gas across different states,” he said on February 17. “Uniformity of tax will lead to reduction of cost of natural gas and increase in its usage across industries. We are committed to bringing natural gas under the GST regime.” 

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At present natural gas is subject to different tax rates in different states. Once it comes under the GST regime, a single tax will apply to the commodity across the country. Gasoline and diesel are likewise not covered by GST.

The industry has been demanding the inclusion of petroleum and natural gas in the GST regime for some years now. It argues that the cascading impact of federal taxes and different tax regimes across different states results in higher prices for end consumers. Because of natural gas not being under the GST regime, consumers are at present not able to claim the input tax credit on central and state taxes paid on supplies.

India is trying to boost the use of gas in the economy to fight air pollution. It wants to raise its share in the energy mix to 15% by 2030 from 6-7% now.