Maharashtra announces massive cut in VAT on CNG; tax to be reduced by over 10%

On Friday, March 11, Maharashtra Finance Minister Ajit Pawar announced a drastic cut in value-added tax (VAT) on natural gas from 13.5% to 3%. The move could make compressed natural gas (CNG) cheaper in the state of Maharashtra. On Friday, Pawar presented his third Budget of the Maharashtra Vikas Aghadi (MVA) government.

The substantial cut in VAT will bring relief for consumers of domestic piped CNG as well as vehicle owners. Compressed natural gas (CNG) is not only an affordable fuel but also a clean form of energy. While cutting the VAT rates, CNG fuel will see cheaper rates in the state. This will also promote clean energy and reduce the dependency on petrol and diesel. 

According to Ajit Pawar, the reduction in VAT rates will cost the state Rs 800 crore in revenue each year. He said, natural gas is environment-friendly and is used for domestic piped gas supply and also for CNG-powered motor vehicles, auto-rickshaws, taxis, and private vehicles.

Currently, the CNG rate in Mumbai is Rs. 66 per kg after the prices were revised upwards at the beginning of the year. In Delhi, the CNG rates are incredibly cheaper than Mumbai at Rs. 43/kg.

CNG stations in Maharashtra

As per the Ministry of Petroleum and Natural Gas, there are about 423 CNG stations in the state of Maharashtra. Gujarat is leading in the number of CNG stations. The state of Gujarat has the highest number, with 731 CNG operating stations, while the largest state in terms of population, Uttar Pradesh, has only 384 CNG stations. With 424 CNG stations, Delhi has the highest density of CNG stations.

Maharashtra growth projected at 12.1%: Ajit Pawar

While tabling the Maharashtra Vikas Aghadi (MVA) government's third state Budget, state Finance Minister Pawar said that the state of Maharashtra is headed towards being the first state in the country to become a $1 trillion economy.

The state's economy is positioned to grow by 12.1%, which is higher than the 8.9% growth rate that the Indian economy is expected to reach.