City Gas Companies seek VAT relief to stay competitive against LPG, EVs: CNBC-TV18

City gas distribution companies are demanding a waiving of standardising of high VAT rates for CNG and PNG

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City Gas Distribution companies (CGDs) have reported sought relief measures like waiver or standardisation of high VAT rates on CNG and PNG to stay competitive against electric vehicles and LPG.

CNBC-TV18 reported citing industry sources that higher VAT rates are having a cascading effect, and mere convenience is not enough to encourage consumers to switch to PNG.

Demands are also being raised to reduce 28 percent GST On CNG vehicle sales to match up to the 5 percent rate that is currently levied on EVs, it is learnt.

EVs and LPG falls under 5 percent GST as against the excise levy of 14 percent and VAT of 5-10 percent on CNG and PNG. CGD players have reportedly sought standardisation against this difference.

On July 11, Rajasthan lowered the VAT it charges on CNG and PNG from 14.5 percent to 10 percent in the state budget that was presented.

The state of Uttar Pradesh levies 10 percent VAT on CNG purchase without any input tax credit, and 12.5% on CNG sales.

The managing director of MGL too had recently expressed hope for an excise duty cut on CNG and PNG, which the company said will be passed on consumers. An excise waiver on CNG may cause a Rs 8,000 crore revenue hit to the Centre, CNBC-TV18 reported, citing sources.

Also Read: Mahanagar Gas plans 20% increase in capex for FY25

There has also been a continued demand for inclusion of CNG and PNG under the GST regime.

Industry sources are also demanding waiver on road tax and  registration charges of CNG vehicles, in-line with EVs, and seeking LPG Free Zones wherever a PNG refuelling network is available.

City gas distributors have had to increase prices of compressed natural gas and piped natural gas in their respective geographical areas by at least Re 1 per kilogram on account of rising input costs.