Chandigarh cuts VAT on natural gas from 12.5% to 5%

The Chandigarh administration has reduced the Value Added Tax (VAT) on natural gas from 12.5 per cent to 5 per cent, effective from midnight on September 18, 2026. The notification, issued by the excise and taxation department under the Punjab Value Added Tax Act, 2005, amends Schedule I of the Act to prescribe the lower rate for compressed natural gas (CNG) and piped natural gas (PNG).

Both Times Now News and Hindustan Times report that the move is expected to reduce the tax burden on consumers using CNG for vehicles and PNG for cooking. However, both sources note that the actual reduction in retail prices will depend on whether gas suppliers pass on the full benefit of the lower tax. The administration said the cut would also encourage the expansion of natural gas infrastructure and promote cleaner fuel options in the city.

Hindustan Times adds that the UT administration has previously set an ambitious target for PNG connections, though uptake has remained well below the target. The notification only changes the applicable tax rate and does not prescribe a new retail price for CNG or PNG.