Rising prices of CNG for vehicles and PNG used for cooking have increased the financial burden on consumers. In a move aimed at providing relief, the Union Territory of Chandigarh has reduced the Value Added Tax (VAT) on natural gas from 12.5% to 5%.
The revised tax rate came into effect from midnight on September 18. The decision covers both Compressed Natural Gas (CNG) used by vehicles and Piped Natural Gas (PNG) supplied to households.
Lower VAT Expected to Reduce CNG and PNG Costs
According to an official statement, the reduction in VAT will provide tax relief to consumers using CNG and PNG across Chandigarh. A lower tax rate can reduce the overall cost of natural gas, with the potential benefit eventually reaching consumers through lower prices.
The decision is also expected to support the development and expansion of natural gas infrastructure in the city.
Since fuel prices form part of the retail inflation basket, lower natural gas prices could also help reduce inflationary pressure in the region. However, the actual reduction for consumers will depend on how gas suppliers pass on the benefit of the lower VAT.
For CNG vehicle owners, the tax cut could translate into lower refuelling costs if the entire benefit is passed on. Similarly, households using PNG for cooking could see their gas bills decline, depending on how suppliers adjust their prices.
Current CNG and PNG Prices in Chandigarh
CNG prices in Chandigarh have recently reached ₹100.50 per kg, while PNG is available at ₹54.70 per SCM.
Following the VAT reduction, prices of both fuels are expected to come down soon. The extent of the reduction, however, will depend on how suppliers incorporate the lower tax rate into their retail prices.
Recent CNG Price Hikes in Delhi and Mumbai
The latest major CNG price increases in Delhi-NCR and Mumbai came shortly before Chandigarh announced its VAT reduction.
In Delhi-NCR, Indraprastha Gas increased the CNG price on August 29 by ₹3.89 per kg. CNG prices were also raised in Mumbai by Mahanagar Gas on September 1, with an increase of ₹2 per kg.
The increases were attributed to higher global prices of liquefied natural gas. Following the hikes, CNG costs ₹86.98 per kg in Delhi, while consumers in Mumbai pay ₹88 per kg.
Chandigarh’s decision to reduce VAT on natural gas is expected to provide relief to both motorists using CNG and households relying on PNG for cooking, although the final benefit will depend on the pricing decisions of gas suppliers.
Disclaimer: Fuel prices and the actual benefit of the VAT reduction may vary depending on supplier pricing, taxes and other applicable charges. Consumers should check the latest CNG and PNG prices with their respective suppliers.