Status quo maintained for Natural Gas

Natural gas/Liquefied Natural Gas imported for power generation by a power generation company is being fully exempted from basic customs duty Budget provisions. The following changes in the duties have been proposed in the Union budget 2012-13:

Industry Expectations ¡V Not fulfilled

„X Expects extension of 'Infrastructure Status' to 'Gas projects' for the purpose of 10-year tax holiday under Section 80-IA

„X Expects exemption from Minimum Alternative Tax (MAT) for Hydrocarbon sector

„X Expects exemption from Levy of 5 per cent import duty on LNG/Natural Gas-Exempt for power generation company only

„X Seeks full coverage of crude, MS, HSD, ATF & Natural Gas under GST

„X Expects Declared Goods status to natural gas and LNG. The 'Goods of special importance in interstate trade or commerce', such as coal, crude oil, domestic LPG have been notified as "Declared Goods' on which max. 5 per cent sales tax can be charged. Natural gas and LNG should also be included in the 'Declared Goods' list as natural gas is the source of CNG and PNG. Declared goods status will make imported LNG cheaper too

Budget Impact

No direct impact on natural gas sector

Outlook

Union Budget 2012-13 had a neutral impact on natural gas sector. None of the demands of the industry were met. However Natural gas/Liquefied Natural Gas imported for power generation by a power generation company is being fully exempted from basic customs duty. This is beneficial for power Generation Company while has neutral impact for Natural Gas Company.