No Gas! Inclusion In GST To Light Up Producer, Distributor Stocks

No Gas! Inclusion In GST To Light Up Producer, Distributor Stocks

ET Intelligence Group: The likelihood of including natural gas under the Goods and Services Tax (GST) gamut augurs well for the gas producing and distributing companies since it will result in lower prices of the fuel thereby making it more competitive with respect to other fuels. Dharmendra Pradhan, Minister of Petroleum and Natural Gas (MoPNG), recently made a strong case for the inclusion of natural gas in the GST regime stating that it is a cleaner fuel than coal, which is already under GST.

The effective tax rate on the compressed natural gas (CNG) and piped natural gas (PNG) in India is 13-40 per cent as a proportion of selling price. The price of CNG includes excise duty of 14 per cent and value-added taxes (VAT) of 5-26 per cent in gas consuming states. For instance, VAT in Delhi is 5 per cent while that in Uttar Pradesh is 26 per cent.

It means, GST rate below 18 per cent may reduce selling prices of the CNG and PNG.This would benefit producers including ONGCBSE 0.20 %, and Oil IndiaBSE -0.32 %, and distributors such as GAILBSE 3.92 %, GSPL, Indraprastha GasBSE 1.42 % (IGL), Mahanagar Gas (MGL) and Gujrat Gas. Read More…

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