Meghalaya Slashes CNG Tax From 14.5% to 5% to Attract Energy Investors

SHILLONG: The Meghalaya Cabinet has approved a sharp reduction in the Value Added Tax (VAT) on methane gas used as Compressed Natural Gas (CNG) — bringing it down from 14.5 percent to 5 percent — in a move aimed at drawing private investment into the state's energy sector and making CNG more affordable for consumers.

Chief Minister Conrad K. Sangma announced the decision on Wednesday, framing it as a step to align Meghalaya with tax rates already in place across most other Indian states.

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The reduction is significant for a state that has lagged behind in clean fuel infrastructure. By narrowing the tax gap with the rest of the country, the Meghalaya government hopes to make the state a more attractive destination for companies looking to set up CNG operations in the Northeast.

"We have reduced our VAT rate on methane gas as Compressed Natural Gas from 14.5 percent to 5 percent in line with what other states are also doing," Sangma said. "This is being done to create a competitive environment so that we will be able to attract different agencies to come and set up their base out here."

Officials indicated the tax rationalisation is part of a broader strategy to position Meghalaya as a viable hub for energy infrastructure investment in the region.

The Chief Minister also provided an update on the long-delayed LPG bottling plant being constructed by Indian Oil Corporation at Umiam in Ri-Bhoi district — a project that has been in the pipeline for years.

Sangma acknowledged the delays but struck an optimistic note on the current pace of progress.

"It is something that was hanging for a long time and it was this government that took the decision, provided the land, and the construction started," he said. "It's going very fast, so we expect it to be completed soon."

Once operational, the facility is expected to significantly reduce Meghalaya's reliance on LPG supplies brought in from outside the state and improve distribution efficiency across the region.