Sector: LPG

India gives autogas a boost

Irrespective of use it's put to, LPG will now be subject to a uniform taxation rate. Not only will it encourage autogas use among motorists, but also it should reduce the problem of lower-taxed domestic LPG as motor fuel.

Both types of LPG will now have the same GST (goods and services tax) rate, which is a change from the current regulations, under which domestic LPG enjoys zero custom and excise duty and minimal VAT, while the retails price of autogas consists of 12-15% taxes. This led dishonest distributors to sell domestic LPG as autogas, boosting their profit by evading applicable taxation. The newly introduced change is bound to put an end to this criminal practice.

This is yet another transformational change. After successfully implementing PAHAL, the subsidy cash transfer programme nationwide, the government has just corrected a long-standing anomaly. This resulted in significant diversion from the domestic LPG to commercial, which was very difficult for the authorities to control and implement. With maze-like multiple tax rates on LPG on its way out, the impact of this is going to be felt immediately and both public and private sector shall be encouraged to invest more in the sector.

Suyash Gupta, Director General of the Indian Auto LPG Coalition

Petroleum minister Dharmendra Pradhan wants all petroleum products included in the uniform GST policy. At the moment, certain fuels (like kerosene, naphta and now LPG) are taxed with this one-size-fits-all rate, others (including crude oil, natural gas, aviation fuel, diesel and petrol) are not. Simplification of rules may give alternative gaseous fuel an edge, so we hope minister Pradhan's GST crusade will succeed. We'll be monitoring the situation, so watch this space.


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Robert Markowski
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