New Delhi : More than four months after the launch of GST, the industry has pitched for 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.
In letter to Finance Minister Arun Jaitley, industry body Ficci has said that keeping natural gas out of the Goods and Services Tax is causing hardships and having adverse impact on the producers as it is increasing their costs.
Currently, crude oil, petrol, diesel, jet fuel or aviation turbine fuel (ATF) and natural gas are not included in GST, which 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 furtherance of business, no credits on input GST will be available to the oil and gas industry leading to huge additional indirect tax burden.
“This is against the basic objective of GST which is to ensure that input taxes are not blocked in the system ie tax cascading is eliminated,” Ficci said in the letter. Currently, gas sales including CNG and piped gas supplies attract lower VAT, ranging from 5 per cent to 12 per cent and inclusion of natural gas in GST should not result in any large revenue loss, it said.