Government should incentivise the use of Auto LPG: IAC
- Auto LPG conversion kits are currently taxed at 28% under the GST regime.
With the Indian government's decision to impose a green tax on old polluting vehicles, alongside the rapidly surging price of petrol and diesel across the country, cleaner fuel like Auto LPG should be incentivised in order to boost its usage, claims the Indian Auto LPG Coalition (IAC). The demand comes at a time, when the Indian government is promoting the usage of cleaner and greener fuel options like Auto LPG, CNG instead of conventional petrol and diesel.
Recently, the Union Ministry for Road Transport and Highways (MoRTH) approved a proposal made in the Union Budget 2021, to levy a 'green tax' on old polluting vehicles in an attempt to curb pollution and push the consumers to switch to environmental-friendly alternatives. As per the government decision the hybrid vehicles, vehicles running on clean alternative fuels such as LPG, CNG and ethanol will be exempt from this green tax.
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While penalising the polluters through a green tax is one solution, introducing incentives for clean fuels will boost the demand for such fuels, which will help in reducing the pollution level, claims IAC.
The conventional petrol and diesel vehicles across different segments can be converted to Auto LPG or CNG powered vehicles by installing conversion kits. While some automakers like Maruti Suzuki, Hyundai offer factory fitted CNG kits on select personal vehicles, the majority of the CNG and Auto LPG conversion is happening in India through the aftermarket. These aftermarket CNG or Auto LPG conversion kits currently cost up to ₹25,000.
These conversion kits are taxed at 28% GST, which contradicts the government's strategy to promote cleaner fuels. IAC believes that these kits can be made more affordable with the reduction of GST and providing subsidy support.
The organisation has been long demanding the rationalising of GST on the CNG and Auto LPG conversion kits. As it claims, these kits should be placed in the 5% GST category, as the reduction of the tax rate from 28% to 5% will make them more affordable for mass usage.