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CHEMEXCIL
Basic Chemicals, Cosmetics & Dyes Export Promotion Council
(Set-up by Ministry of Commerce and Industry, Govt of India)
Jhansi Castle, 4th Floor, 7 Cooperage Road, Mumbai - 400 001.India.
Tel : +91 22 22021288 / * Fax : +91 22 22026684
* E-mail : info@chemexcil.gov.in Web : https://chemexcil.in
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EPC/LIC/Gujarat/ PNG
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22/09/2017
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ALL MEMBERS OF THE COUNCIL
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Reduction of VAT rate on Natural Gas in Gujarat
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Dear Members,
Kindly note that Government of Gujarat has issued Order No. (GHN-76) VAT-2017/S 41 (1) (180 –TH dated Sept 05 2017 regarding remission of VAT rate on Natural Gas by 9% which will effectively reduce applicable VAT rate on Natural Gas in Gujarat from 15% to 6%.
As you are aware, during Pre-GST period, exporters were able to avail credit against the input 15% VAT paid on purchase of Natural Gas in Gujarat. However, Natural Gas is not covered in GST, as a result the VAT paid on Natural Gas is not available as ITC against the GST liability on the related end product. This, straight away increases the cost of production and adversely impacts industry at large, including companies in Chemicals industry. The council has been consistently taking up this issue with the Government.
However, pursuant to this Gujarat Government Order, the Natural Gas supplier shall charge and collect tax at the rate of 6 % (six percent) on sales of natural gas from consumers of the State except for those purchasing natural as for use in generation of electricity or for the manufacture of fertilizer. Further, the Gas supplier shall charge and collect full tax as applicable on the sales in the course of interstate trade or commerce and shall not be entitled to the remission on such sales.
To make the change operational, the Natural Gas consumers in Gujarat shall submit undertaking to the Natural Gas supplier to avail the benefit of reduced VAT rate of 6%.
The relevant members are requested to take note of this positive development. The Gujarat Government order is available for download on below link-
https://www.commercialtax.gujarat.gov.in/vatwebsite/download/cir_noti/NOTI/Remission%20of%20Tax%20on%20Natural%20Gas.pdf
Thanking You,
Yours faithfully,
(S.G. BHARADI)
Executive Director
CHEMEXCIL
Encl : Remission of Tax on Natural Gas
Draft undertaking to be obtained from Customer
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