AP Chambers urge state govt to bring down tax on natural gas

Vijayawada: Various affiliate associations of AP Chambers of Commerce and Industry Federation (AP Chambers) pertaining to MSME, hospitality, manufacturing, construction, tourism, foundries, transport sectors during a meeting held recently said that the higher rates of natural gas (NG) in comparison with other conventional fuels are inhibiting them to switch over to PNG and CNG.

In a letter addressed to Secretary of Industry and Commerce of State government N Yuvraj, the AP Chambers said that one of the components that are increasing the cost of Natural Gas to the end customers is VAT. The current VAT rate on CNG is 24.5 per cent whether it is commercial gas, industrial gas or CNG in AP, which is the highest amongst comparable states across the country. Gujarat with a VAT of 5 per cent on natural gas has seen tremendous growth in its consumption which has further resulted in industrial growth of Gujarat. The substantial taxation on NG is inhibiting industrial, commercial, and transport entities from transitioning to this environmental-friendly fuel option. Lowering the tax burden on NG would alleviate the financial strain, thus encouraging a seamless transition for these sectors towards a cleaner and more sustainable energy source.

Central public sector undertakings like IOCL and other organisations like Bhagyanagar Gas Limited, Godavari Gas limited, Megha Engineering and others have been developing infrastructure under City Gas Distribution project in the State to promote Natural Gas (NG), an eco-friendly fuel alternative, for domestic, commercial, industrial and transport segment. 

A reduction in taxes on NG will act as a catalyst, incentivising and enabling the industrial, commercial, and transport sectors to embrace natural gas as their primary energy source, the AP Chambers opined. This move will not only contribute significantly to a cleaner environment but also align with the government‘s goals of increasing natural gas usage from current 6 per cent to 15 per cent by 2030 and also in reducing carbon emissions and achieving net zero targets.

In this backdrop, the AP Chambers appealed to the State government to consider the matter to bring down the VAT rates and make it as 5 per cent for giving equal competitive footing for Industries in AP.