Making a strong case for the inclusion of natural gas under the new indirect tax regime, Minister for Petroleum and Natural Gas, Dharmendra Pradhan has said that if polluting coal can be included under GST, then the environment-friendly fuel certainly deserves a place in the new regime. He added that natural gas is a cleaner fuel than coal. The minister’s pitch came more than four months after the launch of the Goods and Services Tax (GST), though his ministry had previously written to the Finance Ministry to consider including natural gas in the GST.
Currently, crude oil, petrol, diesel, aviation turbine fuel (ATF) or jet fuel and natural gas are outside the purview of the GST, which has amalgamated over a dozen indirect taxes including excise duty, service tax and VAT since the new tax regime kicked in from July 1. Hence, while various goods and services procured by the oil and gas industry are subjected to GST, the sale and supply of oil, gas and petroleum products continue to attract earlier taxes like excise duty and VAT. Unlike other industries which can take credit for any tax paid towards the furtherance of business, no credits on input GST is available to the oil and gas industry leading to the huge additional indirect tax burden.
Petroleum Minister also said the country needs an overarching policy covering various energy verticals in order to achieve self sufficiency and security in this critical sector. Defending the government's target of doubling Indian oil refinery capacity to 600 million tonnes, he said that all major economies needed multiple sources of energy for growth. Earlier, industry body Ficci too has pitched for the inclusion of natural gas in the new indirect tax regime so as to help producers contain cost and aid in moving towards a gas-based economy.
