Gas companies took a tumble on the bourses on December 17, after reports suggested the inclusion of gas in GST would not on the agenda of upcoming GST Council meet.
The 55th GST Council meeting is scheduled to be held on December 21, 2024. Among the issues to be discussed, expectations are that the Council will review the GST imposed on life and medical insurance, luxury items, and sin goods.
At 1.10 pm, Indraprastha Gas shares were lower by 2.4 percent at Rs 384.85 per share, while GAIL (India) shares were down 1.3 percent at Rs 201.2. Mahanagar Gas shares sank 2.7 percent to Rs 1,252.9 each.
Petrol and diesel are not yet taxed under GST, along with natural gas and aviation turbine fuel (ATF). After the implementation of the GST, both states and Centre gave up the right to unilaterally impose taxes on various sectors with the former left with three crucial avenues to raise revenues — liquor, land and fuel.
Currently, gas sees a slew of taxes: state VAT, central sales tax and central excise duty. The gas value chain has many input and output taxes, especially as a result of the difference in taxation between states. Switching to GST would improve tax inefficiencies.
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Gas/LNG that is bought in Gujarat, but sold in other states sees 15 percent input tax. There is no VAT imposed on CNG in Delhi, but in Maharashtra, Gujarat and UP, the VAT imposed is between three to five percent.
In a report earlier this year, international brokerage Citi Research said if natural gas was brought under the purview of GST, there could be a series of benefits.
On May 30, 2024, the Petroleum Secretary Pankaj Jain said that solving the taxation problem would lead to the rise in usage of natural gas. The government is cautiously optimistic about including NG under GST.
"One big challenge for us continues to be the taxation on gas. Domestic taxes on natural gas are still a work-in-progress. That is affecting the use case for natural gas," he said.
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