Chandigarh, Oct 26 (IANS): In a move that will scale up revenue generation significantly and reduce environmental pollution by encouraging industry to shift to natural gas, the Punjab government on Friday notified reduction in VAT on natural gas in gaseous state, other than compressed natural gas, from 14.3 to 3 per cent.

With this, Punjab has become the state with the lowest value-added tax (VAT) on natural gas in the northern region, which comprises Haryana, Himachal Pradesh, Rajasthan, Delhi and Chandigarh.

The notification, issued in pursuance of a decision taken earlier by the state government, will incentivise industrial units in the state to switch over from polluting fuel to the environment-friendly natural gas, thus reducing industrial pollution.

Also, with the reduction in the rate of VAT, the sale of natural gas in Punjab is likely to increase substantially, thereby yielding increased revenue, according to an official spokesperson.

At present, the rate of VAT on natural gas is 13 per cent plus 10 per cent surcharge i.e. 14.3 per cent, in Punjab.

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

This decision will also give a boost to many industrial units in Gobindgarh and Ludhiana to replace conventional fuel.