Published Dec 29, 2023 | 11:03 AM ⚊ Updated Dec 29, 2023 | 11:03 AM
AP Chambers. (Facebook)
The Andhra Pradesh Chambers of Commerce & Industry Federation, on Thursday, 28 December, appealed to the state government to slash value-added tax on natural gas from 24.5 percent to 5 percent, as the high rate is inhibiting its adoption.
AP Chambers president P Bhaskar Rao submitted a letter to Industries and Commerce Secretary N Yuvraj, stating that the 25 percent VAT is acting as a disincentive to switching over from fossil fuels to eco-friendly fuels, such as piped natural gas (PNG) and compressed natural gas (CNG).
“One of the important issues brought by various associations pertaining to MSME, hospitality, manufacturing, construction, tourism, foundries, transport sectors etc., is that the higher rates of natural gas vis-à-vis other conventional fuels, are inhibiting the switch over to PNG and CNG,” said Rao in his letter.
Noting that VAT is one of the components that is increasing the cost of natural gas to end consumers in Andhra Pradesh, he pointed out that other states such as Gujarat charge only a 5 percent VAT, and said that some other states, too, levy lower VAT than Andhra.
“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 wrote.
He observed that a lower tax burden on natural gas would result in reducing the financial strain on companies, thereby encouraging a transition to cleaner and more sustainable energy sources in sectors such as industrial, commercial, transport and others.
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