GST impact: Auto LPG sellers want tax parity with CNG

LPG is taxed at 18% while CNG is taxed at 5%

Though lower Goods and Services Tax (GST) rates have led to a push in use of liquefied petroleum gas (LPG) in automobiles, there is lobbying to cut it further, at par with the rate of compressed natural gas (CNG).

A rate of 18 per cent has been set for commercial LPG, used as a low emission automobile fuel. CNG is taxed at five per cent. Prior to the July 1 rollout of GST, the tax rate for auto LPG was 23 per cent.

"We have requested both the GST Council and the ministry of petroleum to reduce the rates on auto LPG, at par with CNG, to push green energy. In that case, it will become at least 10 per cent cheaper than CNG," Suyash Gupta, director-general of the Indian Auto LPG Coalition, told Business Standard.

Auto LPG is the third most commonly used automotive fuel (CNG is fourth) in the world, after petrol and diesel. An estimated 26 million vehicles in 70 countries use it. Seven of the 10 largest car manufacturers produce LPG-powered ones. "Compared to CNG, auto LPG has far lower nitrogen oxide emissions. We need to promote this fuel," said Gupta.

In October 2016, auto LPG prices were slashed by the three government oil marketing companies, making the fuel about 50 per cent cheaper than petrol. Sales volumes of auto LPG rose 16 per cent in the period between October 1 and December 31, 2016. Sales in May, at 34,260 tonnes, rose 12 per cent over April. Another major contributor to growth in sales has been the increased accessibility, with close to 1,100 stations across 500 cities and towns.