GST on LPG: IAC Seeks Rate Rationalisation

New Delhi, Sep 2 (PTI) Indian Auto LPG Coalition (IAC), the nodal body promoting clean fuel alternatives in India, has sought rationalisation of GST slabs for industrial LPG, commercial LPG, auto LPG, and LPG retrofitment kits.

Ahead of the GST Council meeting, IAC has formally submitted a letter to Finance Minister Nirmala Sitharaman seeking rationalisation of GST slabs to help promote LPG as a fuel, it said in a statement.

The appeal comes in response to the government's latest move to streamline GST classifications and aims to address long-standing concerns of sectoral disparity.

While domestic LPG is taxed at 5 per cent, its industrial, commercial, and automotive counterparts continue to attract higher GST rates - 18 per cent for fuel and up to 28 per cent for conversion kits.

"This discrepancy not only encourages illegal diversion of the product from domestic to commercial, but also imposes an undue burden on small businesses and MSMEs, including those in food services and agriculture, but also discourages adoption of clean fuels for commercial and transportation uses," IAC said.

The IAC highlighted that an equitable 5 per cent GST for all LPG segments would not only align with global best practices but also eliminate market distortion, foster safer industry growth, and advance India's net zero carbon emission goals.

The existing imbalance risks driving users toward more polluting alternatives, undermining health and sustainability commitments.

Suyash Gupta, Director General, IAC, said, "Industrial, commercial, and auto LPG are lifelines for thousands of MSMEs, transport operators, and food service businesses, and should not be taxed as luxury items. A rationalised GST regime at 5 per cent for these sectors would boost the adoption of cleaner fuels, protect livelihoods, and accelerate India's journey toward net zero emissions. Policy parity, now echoed in global markets, is necessary for sustainable progress, fairness, and a truly inclusive clean energy transition. We urge the Finance Ministry and GST Council to make this imperative shift for the benefit of industry and society."

Most recently, IAC also wrote to the Karnataka Transport Secretary, calling for a more inclusive and expedited policy on the registration of new Auto LPG vehicles in Bengaluru, underlining its ongoing advocacy to promote clean fuel adoption and policy parity at both national and state levels.

"The Indian Auto LPG Coalition remains committed to supporting government initiatives and stands ready to provide further information or attend stakeholder consultations," the statement added.