LPG Price Hiked by Rs 2.94 for Subsidised Cylinder

A worker unloads LPG cooking cylinders from a supply truck outside a distribution centre. Image used for representation.

(Photo: Reuters)

Subsidised cooking gas (LPG) price on Wednesday, 31 October was hiked by Rs 2.94 per cylinder due to tax impact on the change in base price.

A 14.2 kg subsidised LPG cylinder will cost Rs 505.34 from midnight of Wednesday as against Rs 502.40 now, Indian Oil Corp (IOC), the nation’s biggest fuel retailer, said in a statement.

This is the sixth straight monthly increase in rates since June. In all rates have gone up by Rs 14.13 per cylinder since then.

All LPG consumers have to buy the fuel at market price. The government, however, subsidises 12 cylinders of 14.2 kg each per households in a year by providing the subsidy amount directly in bank accounts of users.

This subsidy amount varies from month to month depending on the changes in the average international benchmark LPG rate and foreign exchange rate.

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 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," the statement said.

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.

"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.