Even as CNG & domestic PNG prices in the state are set to come down from December onwards, the government has ruled out any reduction in Value Added Taxes (VAT) on gas sales.

“The gas prices are set to come down from December. As a result, VAT collected on gas will also come down automatically. People will get relief of hundreds of crores due to the reduction in gas prices,” said state finance minister Nitin Patel.

Interestingly, Gujarat charges 15% VAT on CNG and PNG sales, which is the highest in the country. Gas consumers as well as companies have been pressing the government for reduction in the VAT rate.

“The rate of VAT on natural gas is not the highest in Gujarat. Anyway, other states earn Rs2,500 crore to Rs3,000 crore every year on liquor sales. The Gujarat government is forgoing this huge revenue due to prohibition policy. The government also needs its sources of revenue,” he added.

CNG prices in the state are expected to come down by about 20% once supplies of the cheaper domestic gas as per the Administered Price Mechanism (APM) in the wake of a Supreme Court order from December onwards. The CNG price will come down from Rs68.30 per kg currently to around Rs55 per kg.