The Punjab government on Tuesday slashed value-added tax on natural gas to 3.3 per cent from 14.3 per cent earlier to encourage industries to shift to the eco-friendly fuel.
However, the VAT on compressed natural gas, used mainly as auto fuel, will remain at 14.3 per cent, an official statement said here.
A decision to this effect was taken by the Punjab cabinet which met here under Chief Minister Amarinder Singh. This was for the first time that the Punjab cabinet meeting was held outside Chandigarh.
The chief minister said the move would help cut down on industrial pollution in the state.
The major consumer of gas is National Fertilisers Limited (NFL), which uses the gas at its plants at Bathinda and Nangal. Natural Gas is also consumed in very small quantity by select industries and the transport sector.
Before March 2015, the VAT rate on natural gas was 6.05 per cent. From March 2015 onwards, it was increased from 6.05 per cent to 14.3 per cent.
Due to the increase in VAT rate, NFL started interstate billing of natural gas, due to which VAT collection on natural gas decreased.
The VAT collection on natural gas from the years 2014-15 to 2018-19 came down considerably - from Rs 105.77 crore to Rs 5.67 crore, which had further shown a steep decline to Rs 1.84 crore till June 2019, during financial year 2019-20.
The special meeting of the cabinet was convened here to review the progress of various ongoing projects in the historic city of Sultanpur Lodhi.
It also cleared a proposal for declaring Sultanpur Lodhi-Kapurthala-Kartarpur-Beas-Batala (including Batala byepass)-Dera Baba Nanak as 'Sri Guru Nanak Dev Ji Marg'.
