Tax commercial, domestic gas equally under GST to promote auto LPG: Experts

Cutting taxes on commercial LPG key to prevent diversion of domestic fuel for commercial use

With the government ready to roll out the goods and services tax (GST) regime, the Indian Auto LPG Coalition (IAC) has demanded revisions in duties to bring domestic and commercial liquefied petroleum gas (LPG) under uniform tax rates to encourage usage of environment friendly auto LPG and prevent diversion of domestic fuel for commercial use.

Auto LPG is a clean automotive fuel, which is much cheaper than petrol and diesel and very comparable to compressed natural gas (CNG), IAC said. Currently, the duties levied on commercial LPG are much higher than domestic LPG. In fact, there is zero custom and excise duty on domestic LPG and minimal value added tax (VAT), while the same are cumulatively as high as 12-15 per cent on commercial LPG. At the same time, users also enjoy a subsidy on domestic LPG cylinders. "This presents several problems. Firstly, domestic LPG cylinders are often diverted for commercial use in vehicles, which is highly unsafe and allows a misuse of subsidy. Secondly, higher tax rates make auto LPG a less attractive option, when its use needs to be encouraged by all means,” says Suyash Gupta, director general, IAC. 

Auto LPG emits up to 120 times lesser particulate emissions than diesel vehicles, 96 per cent lesser nitrogen dioxides (NOx) than diesel, 68 per cent lesser NOx than petrol and significantly lower NOx than CNG. Also, auto LPG emits about 22 per cent lower carbon dioxide (CO2) than petrol, which is comparable to the CO2 emissions of CNG. At the same time, it is much cheaper than petrol or diesel and very comparable to CNG. Also, unlike CNG, Auto LPG can be easily installed on two-wheelers as well. It is to be underlined that emissions from two-wheelers are major culprits for poor urban air quality.

“Auto LPG has a series of benefits for the environment and increasing its usage widely can have dramatic effects on the air quality of Indian cities, which are choking under the weight of carbon emissions from vehicles. The government must initiate adequate measures to promote its use. Cutting additional taxes on commercial LPG will provide a major incentive to automobile users to shift to auto LPG,” adds Gupta.

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 to help keep their urban environment clean. Also, seven of the 10 largest car manufacturers produce LPG powered cars. The use of LPG as an automotive fuel became legal in India with effect from April 24, 2000. Since then, more than 500 cities have been covered by Auto LPG with more than 1,100 stations.

IAC is the nodal body for the promotion of Auto LPG in India. Members of the coalition include oil sector public sector units, private auto LPG marketers, kit suppliers and equipment manufacturers. The coalition works closely with the World LPG Association, Society of Indian Automobile Manufacturers and Automotive Research Association of India.