Reduce VAT on natural gas from 12.5 per cent to 3 per cent, says GCCI
GCCI president Ralph De Sousa said the rate of VAT on natural gas in Goa is more than four times that levied in Maharashtra, and double the rate of other states such as Gujarat and Haryana.
Panaji: Goa Chamber of Commerce and Industry (GCCI) has written to chief minister Pramod Sawant asking for value-added tax (VAT) on piped natural gas (PNG) for industrial use to be reduced from 12.5% to 3%. GCCI president Ralph De Sousa said the rate of VAT on natural gas in Goa is more than four times that levied in Maharashtra, and double the rate of other states such as Gujarat and Haryana.
The sharp difference between the VAT levied in Goa and in the neighbouring states will put Goa’s industrial units at a disadvantage, said GCCI. It has also called for the inclusion of natural gas under the goods and services tax (GST) regime.
On June 30, the Goa State Pollution Control Board (GSPCB) said the use of petcoke and furnace oil would be discontinued from December 31. GSPCB has recommended compressed natural gas (CNG) and liquefied natural gas (LNG) as alternatives, but unlike furnace oil and petcoke, which are taxed under the GST regime, natural gas and CNG are taxed under VAT. “The industry, particularly the manufacturing sector using PNG as a fuel, is primarily affected by this transition. Due to the inclusion under GST, the industry was able to claim the benefit of the amount of GST paid as input tax credit, and thus the GST was cost neutral,” said Sousa.
Since there is no VAT credit available on PNG, it would have a cascading effect on the final cost to consumers as well as make the products less competitive against those from other states. Gujarat and Haryana charge 6% VAT on natural gas while Maharashtra levies a rate of 3% on natural gas for industrial use.
“The pandemic and the slowdown in the economy have dramatically affected the cost of raw materials in the state. Moreover, the significant VAT component on PNG in Goa will severely impair competitiveness,” said the GCCI president.