(You can now subscribe to our(You can now subscribe to our ETMarkets WhatsApp channelNotwithstanding a below par election outcome, Narendra Modi-led National Democratic Alliance ( NDA ) government could still be in a position to bring the gas sector under the purview of Goods and Services Tax ( GST ) tax, Citi Research said in a note.
The US brokerage remains constructive on the gas sector and picks GAIL (India) and Mahanagar Gas Limited ( MGL ) as its top bets in the energy sector GAIL shares today jumped 8% to the day's high of Rs 210.85 while MGL gained 5% aiding Nifty Oil & Gas index's uptick.
The 15-stocks index was among the top performing indices and was up 2.5% around 12:30 pm.
All counters were trading in the green.Citi's optimism rested on the NDA government still possessing the requisite majority in the GST Council.
For instance gas/LNG purchased in Gujarat and sold in other states attracts a 15% input tax.
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Notwithstanding a below par election outcome, Narendra Modi-led National Democratic Alliance ( NDA ) government could still be in a position to bring the gas sector under the purview of Goods and Services Tax ( GST ) tax, Citi Research said in a note. The US brokerage remains constructive on the gas sector and picks GAIL (India) and Mahanagar Gas Limited ( MGL ) as its top bets in the energy sector GAIL shares today jumped 8% to the day's high of Rs 210.85 while MGL gained 5% aiding Nifty Oil & Gas index's uptick. The 15-stocks index was among the top performing indices and was up 2.5% around 12:30 pm. All counters were trading in the green.Citi's optimism rested on the NDA government still possessing the requisite majority in the GST Council. It said that one of the significant developments in the Modi 3.0 government could be the bringing of the gas sector under the GST ambit.While this issue in itself is relatively less contentious, NDA's push to this reform could help the entire gas value chain, it noted.The current dispensation's focus has been on enhancing the usage of gas in the economy.While the timeline remains uncertain, the benefits which Citi sees as a result of this remain multifold.One is the reduction of tax inefficiencies along the gas value chain as gas currently attracts various input and output taxes leading to cascading of taxes. It would also address differences in taxation between states. For instance gas/LNG purchased in Gujarat and sold in other states attracts a 15% input tax. Meanwhile, VAT (value added tax) on CNG in Delhi is nil versus 3-5% in Maharashtra, Gujarat and UP, the report suggested.With the sector coming under this indirect tax regime, entities such as GAIL, CGDs, and industrial gas consumers could avail input tax credits on their gas purchases. Presently these lie stranded as gas still falls under the VAT regime.It could bring down the price of CNG depending on the GST rate that is fixed as CNG currently attracts a 14% excise duty, the report mentioned.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
