Subsidised LPG price raised for 6th time on tax impact

NEW DELHI: The government on Wednesday raised the price of subsidised domestic cooking gas (

LPG

) by Rs 2.94 per cylinder, marking the sixth monthly increase in a row due to the incremental rise in tax brought about by rising base price.


A 14.2-kg subsidised LPG cylinder will cost Rs 505.34 from Thursday, up from Rs 502.40, reflecting a total increase of Rs 14.13 per cylinder since June.

All LPG consumers pay the market price for subsidised refills and the government transfers the subsidy for up to 12 cylinders per households in a year directly into the consumer’s bank account. This amount varies from the month, depending on the changes in the average

international

benchmark LPG price and foreign

exchange

rate.

The subsidy transfer in customers' bank account has been increased to Rs 433.66 per cylinder in November 2018 as against Rs 376.60 per cylinder in October 2018.

When international rates move up, the government provides a higher subsidy. But as per tax rules, GST on LPG has to be calculated at the market rate of the fuel. The government may choose to subsidise a part of the price but tax will have to be paid at market rates. This has led to an increase in price.

The non-subsidised or market price LPG rates too have gone up by Rs 60 per cylinder to Rs 880. While the price of non-subsidised LPG at Delhi will increase by Rs 60 per cylinder in November 2018, mainly due to change in international price and foreign exchange fluctuations, the actual impact on subsidised domestic LPG customers is only Rs 2.94 per cylinder, which is mainly due to GST,” IndianOil said in a statement.

“Thus the domestic subsidised LPG customer is protected against the increase in prices of LPG,” it said. As a result of higher global rates, the price of non-subsidised LPG in Delhi will increase by Rs 60 per cylinder. The balance Rs 57.06 (Rs 60 minus Rs 2.94) is being compensated to the customer by the increase in subsidy transfer to their bank account. Accordingly, the subsidy transfer in the customer's bank account has been increased to Rs 433.66 in November from Rs 376.60 per cylinder in October.