Leh | August 28, 2026 | INFRAINTEL Bureau
(Business Line)
The Ladakh administration has reduced value-added tax on compressed natural gas and piped natural gas from 21 per cent to 5 per cent to improve affordability and support development of the Union Territory’s City Gas Distribution network.
The decision followed a recommendation from the Petroleum and Natural Gas Regulatory Board, which cited Ladakh’s difficult terrain, dispersed settlements, extreme climate and high transport costs as constraints on the commercial viability of gas infrastructure.
Natural gas remains outside the Goods and Services Tax system and is taxed by states and Union Territories. The revised rate brings Ladakh in line with jurisdictions including Gujarat, Karnataka and Andhra Pradesh.
The PNGRB has authorised Bharat Petroleum Corporation Limited to develop CGD infrastructure in Ladakh. The administration expects lower taxation to assist household PNG connections, CNG adoption and initial demand creation.
Ladakh had earlier reduced VAT on aviation turbine fuel for civilian aircraft from 26.25 per cent to 1 per cent to improve regional connectivity and competitiveness.
The tax reduction lowers an important entry barrier, but network viability will also depend on capital costs, supply logistics, household connection charges, winter reliability and customer density. Implementation should be measured through infrastructure milestones, actual retail-price reductions, connection growth and continuity of supply rather than the tax notification alone.