Indian Oil Minister Urges Inclusion of Gas in the New Tax Regime

Indian oil minister Dharmendra Pradhan has reiterated his demand to include natural gas in the Indian goods and services tax (GST) regime, which came into effect earlier this year.

“Coal is in the 5% GST bracket but a much greener fuel, natural gas, is outside of GST,” he said at the ENRich 2017 event organized by KPMG in New Delhi.

Petroleum products such as petrol, diesel and natural gas, still remain outside the ambit of GST, although all the industry stakeholders have been calling for inclusion of these in the GST.

Under the current Indian tax system, the goods and services tax (GST), manufacturing companies get a credit of 18% when they use petcoke or furnace oil. But as natural gas is not under GST, the state VAT – ranging from 6% in the state of Rajasthan to 26% in the state of Uttar Pradesh – is charged.

Experts believe that this tax anomaly is giving unfair advantage to dirtier fuels such as coal, furnace oil and petroleum coke (petcoke). The Indian Supreme Court recently banned the use of petcoke and furnace oil in Delhi and the National Capital Region (NCR) but there is no such restriction in rest of India.