The transcript highlights India's strategic objective to significantly increase natural gas consumption. This policy is driven by the fuel's cleaner properties compared to other fossil fuels and aims to shift the national energy mix.
The current tax regime for natural gas is a complex patchwork of different levies. While components like LNG terminals, compression services, and CNG dispensers are under GST, the gas itself is subject to state-level VAT, and compression also attracts an excise duty.
A central point is the persistent call to bring natural gas under the unified GST framework. This move would simplify the tax structure, allow for input tax credits across the value chain, and create a more predictable and efficient market.
While CBG is promoted as a domestic alternative to imported gas, its policy framework creates obstacles. CBG falls under GST while natural gas does not, causing issues when they are mixed. Furthermore, CBG faces an inverted duty structure where input taxes are significantly higher than the tax on the final product.
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