The government should reduce GST on LPG used in automobiles to 5 per cent to provide the environment-friendly fuel a level playing field and spur its usage, the association of auto LPG has demanded.
The Indian Auto LPG Coalition (IAC) wants the government to treat auto LPG at par with any other clean fuel like CNG and provide similar fiscal regime as a mix of such fuels would be needed to curb urban pollution in the world's fastest-growing economy, its director-general Suyash Gupta said.
LPG is a clean fuel like compressed natural gas (CNG) and has cost advantages over diesel or petrol. Auto LPG is used in 70 countries world over as compared for 4-5 nations including Iran, India, and Pakistan using CNG as automobile fuel.
Auto LPG requires a lighter cylinder than CNG and takes almost similar time as petrol/diesel for a refill, he said.
"We have written to Union Finance Minister Nirmala Sitharaman as well as all members of the GST Council for considering reducing GST tax on auto LPG to 5 per cent from 18 per cent currently," he said.
LPG used for domestic purposes is taxed at 5 per cent and high incidence of tax for its usage in automobiles provides an incentive for illegal diversion, he said.
IAC also sought a reduction in GST on auto LPG kits to 5 per cent from 28 per cent.
"Providing policy level support and enabling a quicker growth of environment-friendly fuels is imperative now and just not an optional issue anymore," he said.
He said, while the government is providing Rs 10,000 crore subsidy to push for sale of electric vehicles, auto LPG does not need any subsidy allocation - just a level playing field through policy interventions such as lowering GST.
Auto LPG, when compared to CNG, has 13 per cent lower methane emissions and slightly lower carbon dioxide emissions on a well-to-wheel basis, he said.
Globally, auto LPG is the third most commonly used automotive fuel after petrol and diesel. Over 26 million vehicles across 70 countries use auto LPG and seven of the 10 largest car manufacturers produce LPG powered cars, he said.
In India, auto LPG is available in 500 cities a more than 1,100 fuel stations.
He said auto LPG costs around 40 per cent less than petrol.
"Unlike CNG, auto LPG can be easily and successfully installed on 2-wheelers also. Emission from 2-wheelers rank right on top, in terms of its contribution to the urban air quality issues because of high particulate matter (PM) emissions," he said.
Gupta said over 1.5 lakh three-wheelers run on auto LPG in Bengaluru where it is taxed at par with CNG.
In other cities such as Delhi, CNG has lower tax incidence.