High VAT on CNG in J&K discouraging clean fuel adoption: FADA Jammu

Jammu, Dec 31: The automobile industry in Jammu and Kashmir has raised serious concern over the disproportionately high Value Added Tax (VAT) imposed on Compressed Natural Gas (CNG) in the Union Territory, saying it is discouraging the adoption of a cleaner and more economical fuel and adding to the burden on consumers and commercial operators.

In a representation, Federation of Automobile Dealers Associations (FADA) Jammu highlighted that VAT on CNG in Jammu and Kashmir stands at 21 percent, significantly higher than neighbouring states and Union Territories. By comparison, Delhi has exempted CNG from VAT, while Punjab levies 3 percent, Haryana 5 percent, Uttar Pradesh 12.5 percent, Himachal Pradesh 13.7 percent and Rajasthan 7.5 percent. As a result, CNG prices in J&K hover around Rs 98 per kg, compared to Rs 77 in Delhi and substantially lower rates in other nearby regions.

FADA Jammu Chairperson Sanjay Aggarwal said the high VAT has multiple negative implications, including discouraging the shift to cleaner fuels and increasing operational costs for commercial vehicles, public transport operators and logistics businesses. He said the continued dependence on petrol and diesel contributes to higher air pollution and undermines efforts toward environmental sustainability.

He pointed out that the J&K economy largely depends on tourism, horticulture and small-scale industries, all of which rely heavily on commercial transport. Despite strong interest among fleet operators to shift to CNG due to its lower operating cost, better mileage and environmental benefits, the high tax structure has made its adoption unviable in the UT.

The automobile dealers’ body has urged the J&K government to reconsider and rationalise VAT on CNG in line with neighbouring states and Union Territories. Such a move, it said, would promote cleaner energy use, reduce transport costs and provide economic relief to consumers while supporting environmental conservation.