Gas sector may come under GST purview in Modi 3.0, GAIL, MGL to be top beneficiaries: Citi

Citi's optimism rested on the still possessing the requisite majority in the GST Council. It said that one of the significant developments in the government could be the bringing of the gas sector under the GST ambit.

While this issue in itself is relatively less contentious, NDA's push to this reform could help the entire gas value chain, it noted.

The current dispensation's focus has been on enhancing the usage of gas in the economy.

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While the timeline remains uncertain, the benefits which sees as a result of this remain multifold.

One is the reduction of along the gas value chain as gas currently attracts various input and output taxes leading to cascading of taxes. It would also address differences in taxation between states. For instance gas/LNG purchased in Gujarat and sold in other states attracts a 15% input tax. Meanwhile, VAT (value added tax) on CNG in Delhi is nil versus 3-5% in Maharashtra, Gujarat and UP, the report suggested.

With the sector coming under this indirect tax regime, entities such as GAIL, CGDs, and industrial gas consumers could avail on their gas purchases. Presently these lie stranded as gas still falls under the VAT regime.

Benefits for consumers

It could bring down the price of CNG depending on the GST rate that is fixed as CNG currently attracts a 14% excise duty, the report mentioned.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)