Andhra govt hikes VAT on natural gas by 10% to offset revenue losses
The Andhra Pradesh government on Saturday increased the Value Added Tax (VAT) on natural gas by 10 per cent with immediate effect on grounds of augmenting the revenue of the state.
An order (GO No. 265) to this effect was issued by special chief secretary (commercial taxes) Rajat Bhargava. “The government has decided to increase the rate of tax on natural gas from 14.5% to 24.5% by revising the VAT rate under Schedule-V of the APVAT Act,” the order said.
Apart from liquor, as many as five petroleum products – crude oil, natural gas, high speed diesel, petrol and aviation turbine fuel (ATF), are under the VAT purview, after the other items were subsumed in the Goods and Services Tax (GST).
In July, the state government increased the cess on petrol from Rs 2.76 to Rs 4 (an increase of Rs 1.24 per litre), apart from VAT of 31% and on diesel from Rs 3.07 to Rs 4 (an increase of 93 paisa per litre), apart from a VAT of 22.25%, saying that the state’s own revenues had dried up due to the Covid-19 pandemic.
In the order, Bhargava explained in detail how the state government had been incurring huge expenditure on tackling the Covid-19 pandemic, while continuing to implement flagship welfare schemes for various sections of people over the last few months.
He said in April this year, the state had realised only Rs 1,323 crore through its own resources as against Rs 4,480 crore in April, 2019, which was 29.5% of the total expected revenue. Similar trends were also observed for May, June, July and August, 2020.
He said the expenditure, on the other hand, had increased steeply on health services and welfare schemes such as Rythu Bharosa, Vahana Mithra, Jagananna Vidya Deevena, Jaganna Chedodu, Tele medicine, zero interest loan schemes to women, Amma Vodi and Nadu Nedu etc.
“Considering the fact that the revenues of the state are plummeting on the one hand and the requirement for finances to implement the pro-poor schemes is escalating on the other hand, it has become imperative to augment the revenues of the state,” Bhargava said.
Meanwhile, the chief minister’s office (CMO) clarified that the increase in VAT on natural gas from 14.5% to 24.5% has nothing to do with liquefied petroleum gas (LPG) which comes under GST purview with a tax rate of 5 per cent.
“Natural gas is used as input in certain industries and in gas-based power projects. Though it is also used as domestic fuel as “piped natural gas” in certain areas of metro cities, the rate of tax on “piped natural gas” for domestic purposes is only 5% under VAT Act. The increased tax rate on natural gas is applicable only to the natural gas other than that used for domestic use,” the CMO clarified.