Saturday, June 18, 2011

Why does Gujarat Govt Charges Highest VAT on CNG?

Gujarat Government is as bad as a greedy business tycoon who spares no opportunity to extract maximum from the needy customers. Gujarat Compressed Natural Gas (CNG ) consumer pays highest Value Added Tax (VAT) in the country. The state is the biggest consumer of gas in the country, accounting for 40% of the total gas consumed.

In contrast to national Capital where there is no VAT on CNG a Gujrati consumer has to pay 15% VAT. Because of this, a consumer here has to pay between Rs37-38 per kg, as compared to less than Rs30 a kg in New Delhi.

Neighbouring state of the nation capital, Haryana has a rate of 5%. The host of D6 gas block Andhra is very close to Gujarat with 14.5% followed by Uttar Pradesh with 13.5%. Other states are at the same rate of 12.5% VAT.

Why does Gujarat levi so much excessive VAT? According to state energy minister, Saurabh Patel ,

"Gujarat is totally dependent on imported LNG to meet its gas requirements. CNG rates in Gujarat will go down by as much as 30% if Centre allocates cheaper D6 gas to the state."

The habitual statements of Gujarat Ministers to blame Center for all evils is the sad part. Rate of VAT has nothing to do with the source of Gas whether D6 or imported. This can only change the base rate. Getting more allocation of D6 gas will only change the base cost and not the VAT rate. Gujarat Govt should understand that people know the difference, only problem is that there is no body to raise there concern. 

This also does not mean that Congress is for lower rate of taxes. UPA government has levied 14.42% Central Excise duty (including 3% education surcharge) on gas. Base rate control is also with them for which there is no mercy. During the next 12 months the pricing formula to be followed by the Gas Distribution indicates a rise of at least Rs 6 per Kg before this year end. If Diesel price hike comes soon, the total hike on gas may also come immediately.

This is the time when the government should make the segmentation of fuels for passanger transportation and and goods transportation. It is the time where goverment should take a call and encourage cleaner fuels and technologies instead of penalising the users of clean fuels.

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