Sultanpur Lodhi (Punjab), Sep 10 (IANS): In a significant decision aimed at encouraging industries to shift to the eco-friendly gas, the council of ministers on Tuesday decided to cut down VAT on natural gas, in gaseous state other than compressed natural gas, from 14.3 to 3.3 per cent.

Chairing the cabinet meeting in this historical town, Chief Minister Amarinder Singh said the move would help cut down industrial pollution.

At present, the rate of value-added tax (VAT) on natural gas is 13 per cent plus 10 per cent surcharge i.e. 14.30 per cent in the state.

The major consumer of gas is National Fertilisers Ltd (NFL), which uses the gas at its plants at Bathinda and Nangal.

The natural gas is also consumed in very small quantity by select industries and the transport sector.

Before March 2015, VAT rate on natural gas was 5.5 per cent plus 10 per cent surcharge i.e. 6.05 per cent.

From March 2015 onwards, VAT rate on natural gas was increased from 6.05 to 14.3 per cent.

Due to increase in VAT rate, NFL started interstate billing of natural gas due to which VAT collection on natural gas decreased.

The VAT collection on natural gas from 2014-15 to 2018-19 came down considerably -- from Rs 105.77 crore to Rs 5.67 crore, which had further shown a steep decline to Rs 1.84 crore till June 2019, during financial year 2019-20.