Will GST on CNG Vehicles Be Reduced? Here’s What PNGRB Wants
India’s push for clean energy just got a fresh nudge. The Petroleum and Natural Gas Regulatory Board (PNGRB) has urged the government to lower GST on CNG vehicles and eliminate excise duty on Compressed Bio Gas (CBG). The idea? Make clean transport affordable and sustainable.
This move, if accepted, could reshape how natural gas-based mobility is taxed and bring relief to both auto manufacturers and fleet owners.
PNGRB’s Proposal: What’s Changing?
Here’s what the regulator has proposed to the Ministry of Petroleum and Natural Gas:
- Reduce GST on CNG-powered vehicles from the current 28% (same as petrol/diesel cars).
- Remove excise duty on CBG to promote usage among industrial and retail consumers.
- Treat natural gas at par with electricity in tax treatment, considering both are clean energy sources.
These recommendations were part of PNGRB’s recent communication during stakeholder discussions aimed at boosting India’s City Gas Distribution (CGD) and bio-energy sectors.
Current GST on CNG vs. EVs vs. Petrol Vehicles
| Vehicle Type | Current GST Rate | Excise Duty | Notes |
|---|---|---|---|
| Petrol/Diesel Cars | 28% + cess | Yes | Highest tax burden |
| CNG Vehicles | 28% | No | No cess, but same GST as fossil fuel |
| EVs | 5% | No | Government-supported rate |
Key issue: CNG vehicles get no special benefit despite being cleaner than petrol/diesel. EVs get 5% GST. CNG, though more accessible and cheaper, is still taxed heavily.
Legal & Policy Basis
- GST Rates are governed by recommendations of the GST Council under Article 279A of the Constitution.
- Current rate of 28% on automobiles is notified under Notification No. 1/2017 – Central Tax (Rate).
- CBG is produced from biomass/waste, and stakeholders argue that taxing it via excise duty undermines the Bio-Energy Mission.
- PNGRB, established under the Petroleum and Natural Gas Regulatory Board Act, 2006, acts as a statutory body to promote CGD and natural gas infrastructure in India.
Why It Matters: A Cleaner Transport Push
- Affordability: Lowering GST makes CNG cars cheaper, helping middle-class buyers shift from petrol.
- Pollution Control: CNG emits 20–25% less CO₂ and 80% less NOx compared to diesel.
- Energy Security: India imports ~85% of its crude oil. CNG and CBG reduce dependence.
- Bio-Waste Usage: CBG production boosts rural employment and turns agri-waste into fuel.
Expert Take: Missed Opportunity So Far
“Despite being clean and scalable, CNG vehicles get no tax incentive. GST parity with EVs can create a real behavioural shift,” says a senior tax consultant at Efiletax.
Will GST Council Act?
While PNGRB can only make recommendations, final decision rests with the GST Council — a constitutional body comprising the Union Finance Minister and state finance ministers.
In past meetings, the Council has focused more on EVs, leaving CNG-based transport in a grey zone. If accepted, this could be a game-changing decision ahead of India’s 2070 Net Zero goal.
FAQs
Q1. What is the current GST on CNG vehicles?
A. It’s 28%, the same as petrol/diesel vehicles, but without the additional cess.
Q2. Why is PNGRB pushing for GST cut?
A. To promote cleaner, cheaper transport and encourage use of domestic biofuels like CBG.
Q3. Does excise duty apply on CBG?
A. Yes, currently. PNGRB wants it removed to boost adoption.
Q4. Who can decide GST rate changes?
A. Only the GST Council, which includes both Central and State governments.
Conclusion: Time to Rethink Tax on Clean Fuels
Lowering GST on CNG vehicles and removing excise on CBG can bridge the gap between policy and ground reality. It’s a timely call by PNGRB. As India builds toward a low-emission economy, rationalising taxes on alternative fuels is not just good economics — it’s essential policy.
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Summary
PNGRB has urged a GST rate cut on CNG vehicles and removal of excise duty on CBG to boost green mobility. This move aims to make clean fuels affordable and support India’s shift to sustainable transport. Final decision awaits GST Council approval.