Prior to Diwali, the Gujarat government on Monday announced a 10% VAT (Value Added Tax) decrease on CNG and PNG as well as the annual gifting of two cooking gas cylinders to 38 lakh beneficiaries of the Center’s Ujjwala programme.
The state exchequer will spend a total of Rs 1,650 crore on the reduction in VAT on CNG (compressed natural gas), PNG (piped natural gas), and two free liquefied petroleum gas (LPG) cylinders provided to Ujjwala scheme beneficiaries each year. The reduction in VAT is being implemented as Gujarat’s Assembly elections are only a few months away.
“Our government has reduced VAT on CNG and PNG by 10 per cent. This will help homemaker women, auto-rickshaw drivers and all those who are using CNG-run vehicles,” state minister Jitu Vaghani said.
Gujarat had a 15% VAT on CNG and PNG (used by families in kitchens), but the tariff will now drop to 5%, according to industry sources.
According to him, this will lower CNG pricing by Rs 6 per kg and PNG rates by Rs 5 per standard cubic metre. He also stated that the state government will lose over $1 billion in revenue as a result of the tax reduction.
“Around 38 lakh families have been given LPG connections under the Ujjwala scheme. The state government has decided to provide two gas cylinders to each of these families per year. This will cost the government ₹ 650 crore per year,” he said.
“This LPG subsidy will reach the account of the beneficiary within three days of purchase of the cylinder,” he said.