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GAIL Chief Calls For Natural Gas To Come Under GST Regime

Updated: Apr 11, 2024 04:47:55pm

GAIL Chief Calls For Natural Gas To Come Under GST Regime

New Delhi, Apr 11 (KNN) India's largest gas marketer and transporter, GAIL, is urging the government to bring natural gas under the Goods and Services Tax (GST) regime to boost its usage and achieve the country's goal of increasing the fuel's share in the energy mix to 15 per cent by 2030.

In an interview with ET, GAIL Chairman Sandeep Kumar Gupta highlighted that the absence of input tax credit under the current tax structure makes natural gas more expensive than competing liquid fuels. 

Bringing natural gas under the GST regime would solve this issue of stranded input credit claims.

Gupta emphasised that some bold policy interventions are needed for India to meet its ambitious target of more than doubling the share of natural gas in the energy mix by the end of this decade. 

He proposed that natural gas should attract no more than a 5 per cent GST rate.

In addition to incorporating natural gas into the GST framework, the GAIL chief recommended mandating the use of natural gas in refineries, steel making, and other industries for environmental reasons. 

He also suggested making emissions a factor in the merit order for electricity dispatch, which would help gas-based power plants compete with coal-based supply.

Currently, about 80 per cent of India's gas-based power plants remain idle as they cannot make it to the merit order based solely on production costs. 

By factoring in emissions, gas-based power could begin displacing otherwise cheaper but more polluting coal-based power.

Gupta stated that the government should extend similar incentives to gas-based fuels as those provided to electric vehicles (EVs) during the energy transition. 

He called for reducing the GST rate on CNG vehicles to 5 per cent, at par with EVs, and introducing production-linked incentives (PLI) for LNG-powered vehicles.

The chairman acknowledged that while the global LNG market is well-supplied at present, OPEC+'s production cuts have impacted prices linked to crude oil. 

However, he expressed confidence that the situation could correct if the group reviewed its decision, given the significant upcoming increase in global LNG export capacity.

(KNN Bureau)


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