SRINAGAR: Lieutenant Governor of Ladakh Vinai Kumar Saxena has approved a reduction in Value Added Tax (VAT) on natural gas from 21 per cent to 5 per cent, aimed at making CNG and PNG more affordable and supporting the expansion of the Union Territory’s City Gas Distribution (CGD) network.
The reduction is expected to facilitate the rollout of piped natural gas connections to households, while encouraging the use of cleaner fuels and supporting Ladakh’s broader clean-energy and sustainable development objectives.
The decision followed a June 22, 2026 communication from the Petroleum and Natural Gas Regulatory Board (PNGRB) under the Ministry of Petroleum and Natural Gas, which sought a concessional fiscal framework for natural gas in Ladakh.
The regulator cited Ladakh’s difficult terrain, dispersed settlements, extreme weather conditions and high costs involved in transporting energy over long distances as factors that could make CGD projects less economically viable than in other parts of the country.
Acting on the recommendation, Saxena approved the reduction, bringing Ladakh’s VAT rate on natural gas in line with Gujarat, Karnataka and Andhra Pradesh, which levy 5 per cent VAT on the fuel.
Natural gas is currently outside the Goods and Services Tax (GST) regime and is therefore subject to VAT imposed by individual states and Union Territories.
“Our objective is to make essential energy more affordable to the people of Ladakh while creating an enabling environment for investment and infrastructure development,” Saxena said.
He said the lower VAT rate would support the expansion of PNG and CNG services, strengthen the clean-energy ecosystem and contribute to improving the quality of life in Ladakh.
The PNGRB has authorised Bharat Petroleum Corporation Limited (BPCL)to develop the CGD infrastructure in Ladakh. It had subsequently recommended a concessional VAT rate of 5 per cent or lower for PNG and CNG, stressing that affordability would be important for generating consumer demand during the initial phase of the network’s development.
The VAT reduction is expected to support the economic viability and wider adoption of the CGD network in the Union Territory.
