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Reduction of VAT rate on Natural Gas in Gujarat

Basic Chemicals, Cosmetics & Dyes Export Promotion Council
(Set-up by Ministry of Commerce and Industry, Govt of India)

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EPC/LIC/Gujarat/ PNG





Reduction of VAT rate on Natural Gas in Gujarat


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-



Thanking You,

Yours faithfully,


Executive Director


Encl : Remission of Tax on Natural Gas

Draft undertaking to be obtained from Customer


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