Auto-LPG sellers want GST equality with CNG

Vol 20, PW 20 (29 Jun 17) Midstream & Downstream

Anyone using LPG as car fuel will soon have to pay a much higher tax rate than CNG which is also used as car fuel.

Under the new Goods and Service Tax (GST) regime that begins July 1 uniform taxes replace multiple central and state taxes on goods and services. But the GST rate for LPG sold as fuel for cars or auto-LPG is 18% while for CNG it is 5%.

Suyash Gupta, director general of the Indian Auto LPG Coalition (IAC), an industry lobby group, has petitioned the government's GST Council for equality in taxes. "Such a wide difference between GST rates tells equipment manufacturers the government prefers CNG to LPG," says Gupta.

"All we want is a level playing field." In India taxes on auto-LPG can be as high as 23% but on CNG there's no tax - at least in Mumbai and Delhi. Gupta adds that auto-LPG is available in more than 500 cities across the country while CNG is restricted to around 20 because it needs gas pipeline connectivity.

"Setting up a stand-alone auto-LPG retail station costs Rs40 lakh ($61,000) and can be done in a few months," he says. "But a CNG station costs about Rs3cr ($464,000) and takes longer because it is usually part of a city gas network." Converting a liquid-fuelled vehicle to LPG costs around Rs20,000 ($310) against Rs40,000 ($619) to convert to CNG.