Oil minister sees jet fuel and gas under GST soon to improve business climate

NEW DELHI: Minister of Petroleum Dharmendra Pradhan on Thursday I expected the finance minister Nirmala Sitharaman in his Budget he will set the tone to bring fuel for airplanes and natural gas under the GST regime to reduce the multiplicity of taxes and improve the business climate.

“Our expectation is that in the coming Budget, ATF and natural gas is included in GST,” Pradhan said at a conference on natural gas organsied by industry chamber Ficci here. On a day Delhi’s air quality pust focus back on pollution in cities, Pradhan said bringing clean-burning natural gas under GST will be one of the biggest drivers of not just consumption but will also incentivize producers to spend more on finding and producing more gas as well as incentivise importers to bring in more LNG.

Along the same lines, Pradhan in another function later in the day rode in a hydrogen-fueled automobile developed by Toyota-Kirloskar. Here he also asked the industry to focus on finding alternative fuels and mobility solutions.

Pradhan said the government is working to increase the share of gas in the country's energy basket to 15% by 2030 from 6% today with the goal of reducing dependence on coal and liquid fuels.

Pradhan's words about GST will be music for the aviation and gas industries. Aircraft fuel accounts for almost half of the airline's operating cost. A lower and more uniform tax rate across the country will thus reduce the operating cost for airlines. Gas companies will benefit, as they will be able to claim GST paid for the inputs for the production or distribution of gas, etc.

Pradhan has presented a case for the GST Council, the highest decision-making body of the indirect tax regime: make a decision in favor of these two fuels as soon as possible. The Council is headed by the Minister of Finance of the Union and is composed of representatives from all states and territories of the Union.

Under the existing structure, both natural gas and ATF attract the Centre's excise duty and a state's value-added tax (VAT). Both these and all other levies will get subsumed under GST if they are brought under its ambit.

The decision on its inclusion depends on the financial position of the states as income of these five Petroleum Products constitute a substantial part of state government finances.

Except for a few, most states are incurring an income deficit since GST subsumed a dozen of its taxes, introducing the single tax, in an attempt to simplify the tax system and eliminate the cascading effect of the 'tax on taxes' in the country.

According to the industry, keeping ATF and natural gas out of the GST net was increasing the cost of these products as a tax on inputs is not being credited against the sale of these products, which ultimately, adds to the cost of production.

El ministerio de aviación ha buscado una y otra vez la inclusión de ATF bajo GST ya que cualquier aumento en las tasas internacionales de Petroleum se refleja en los precios de los combustibles para aviones nacionales, lo que lleva a boletos aéreos más costosos.

Natural gas is widely used as industrial input by a variety of industries - from power to steel - and it coming under GST would help eliminate the cascading impact of taxes, bringing down prices of CNG and piped natural gas .