India has a national goal to more than double the share of natural gas in its energy mix, from the current 7% to 15%, positioning it as a key clean fuel.
The current tax structure for the natural gas value chain is highly fragmented, involving a mix of state-level VAT, national GST on various components, and excise duties, which complicates operations and increases costs.
There is a significant, long-standing demand to bring natural gas under the national GST framework to streamline taxation, reduce inefficiencies, and optimize the entire value chain.
The growth of Compressed Biogas (CBG), a key alternative to imported gas, is hindered by tax disparities with natural gas and an inverted duty structure under GST, creating operational and financial challenges.
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Concerns Raised
The fragmented tax system (VAT, GST, excise duty) creates inefficiencies and high costs across the gas value chain.
An inverted duty structure for Compressed Biogas (CBG) makes projects financially unviable.
Different tax treatments for natural gas and CBG create operational challenges for commingling the two gases.
Opportunities Identified
Significant market growth potential driven by the national goal to increase natural gas share from 7% to 15%.
Major efficiency gains and cost reductions if natural gas is brought under the GST framework.
Developing the domestic Compressed Biogas (CBG) sector to reduce reliance on energy imports.