Explained: Why energy MNCs want natural gas to come under GST

Context: The inclusion of natural gas under the GST regime would do away with the central excise duty and different value added taxes imposed by states.

• Global energy majors have called on the government to bring natural gas under the GST regime at the India energy Forum.
• Currently petrol, diesel, aviation turbine fuel, natural gas and crude oil fall outside India’s Goods and Services Tax (GST) regime.
• Government is considering bringing natural gas under the ambit of the GST regime.

Goods and Services Tax (GST)

• It was a federal initiative to ease trade.
• Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services.
• It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
• GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.
• Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.

Why is it important to bring natural gas under the GST regime?

• Bringing natural gas under the GST would lead to a reduction in the cascading impact of taxes on industries such as power and steel, which used natural gas as an input.
• The inclusion of natural gas under the GST regime would do away with the central excise duty and different value added taxes imposed by states.
• This would lead to an increase in the adoption of natural gas in line with the government’s stated goal to increase the share of natural gas in the country’s energy basket from 6.3% to 15%.
• “The energy consumption per capita in India is just 30 per cent of the world average.

https://indianexpress.com/article/explained/natural-gas-gst-tax-energy-companies-lpg-lng-6900697/