CARE Ratings For Inclusion Of Natural Gas, Jet Fuel Under GST

The energy industry expects LNG customs duty to be waived off completely from the current 2.5 per cent.

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CARE Ratings For Inclusion Of Natural Gas, Jet Fuel Under GST

At present, only LPG, kerosene and naphtha are subject to a GST rate.


As the government is due to present the Budget on February 1, all eyes remain on the government's annual financial statement. The interim budget, last before the general elections due by May this year, will be closely followed by industry players, analysts and general public. However, where experts do not expect a major announcement, credit ratings agency CARE has asked for inclusion of natural gas and jet fuel under the GST (Goods and Services Tax) regime. The ratings agency also said the energy industry expects LNG customs duty to be waived off completely from the current 2.5 per cent, to benefit domestic regasification terminals.

LNG imports account for a 47 per cent share in total consumption. Also, the consumption of natural gas has also increased by 15 per cent during the April to November period in the financial year ending March 31, as compared to the same period in the previous fiscal year.

At present, only LPG, kerosene and naphtha are subject to a GST rate. Bringing fuel products under the ambit of GST has been deliberated for long, noted CARE Ratings.

However, the state and Centre, have not been able to build a consensus on revenue sharing, it said.

Allocations as per the 2018-19 Union budget, the oil and gas industry had received Rs 24,932 crore as fuel subsidies where Rs 20,377 crore was earmarked as LPG subsidy and the remaining Rs 4,555 crore was classified as kerosene subsidy.

The industry expects the government to widen the fuel subsidy and include all cooking fuels such as piped natural gas and bio gas, a move to which will benefit all consumers besides making it attractive for consumers to switch to alternate cooking fuels, said CARE Ratings. 

"The government will also have to increase the petroleum subsidy as it aims to provide LPG connections to all poor households under the Pradhan Mantri Ujjwala Yojana (PMUY)."

The scheme, launched in 2016, originally targeted giving LPG connections to mostly rural women members of below the poverty line (BPL) households. The list was later expanded to include all SC/ST households and forest dwellers among others.



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