Andhra Pradesh Chambers of Commerce & Industry Federation on Thursday appealed to the state government to slash value-added tax on natural gas from 24.5 per cent to 5 per cent as the high rate is inhibiting its adoption.
AP Chambers president P Bhaskar Rao submitted a letter to Industries & Commerce Secretary N Yuvraj, saying the 25 per cent VAT rate is acting as a disincentive to switching over to eco-friendly fuels such as piped natural gas (PNG) and compressed natural gas (CNG) from fossil fuels.
“One of the important issues brought by various associations pertaining to MSME, hospitality, manufacturing, construction, tourism, foundries, transport sectors etc…that the higher rates of natural gas vis-a-vis other conventional fuels are inhibiting the switch over to PNG and CNG,” said Rao.
Noting that VAT is one of the components that is increasing the cost of natural gas to end customers in Andhra Pradesh, he pointed out that other states such as Gujarat charge only 5 per cent VAT rate, and said that some other states too levy lower VAT than AP.
Andhra Pradesh levies one of the highest VAT rates in the country whereas Gujarat’s industry-friendly rate has enabled a tremendous growth in natural gas consumption, he added.
He observed that lower tax burden on natural gas results in reducing financial strain of companies and thereby encourages transition to cleaner and more sustainable energy sources in sectors such as industrial, commercial, transport and others.
