INSUBCONTINENT EXCLUSIVE:
tax impact on reduced market rate of fuel
A 14.2-kg subsidised LPG (Liquefied petroleum gas) cylinder will cost Rs 494.99 in national capital from midnight tonight as against Rs
500.90 currently, Indian Oil Corp (IOC), country's largest fuel retailer, said in a statement
This is second straight monthly reduction in LPG rate.On December 1, subsidised LPG price was cut by Rs 6.52 per bottle
That price cut had come after six consecutive monthly hikes in rates since June
The two price reductions have mostly negated Rs 14.13 per cylinder increase in rates between June and November.IOC said non-subsidised or
market priced LPG rates have been cut by a steep Rs 120.50 per cylinder "due to fall in price of LPG in international market and
strengthening of US dollar-rupee exchange rate."It will now cost Rs 689 per 14.2-kg cylinder in Delhi.On December 1, price of non-subsidised
LPG was cut by Rs 133 per bottle.All LPG consumers have to buy fuel at market price
The government, however, subsidises 12 cylinders of 14.2 kg each per households in a year by providing subsidy amount directly in bank
accounts of users.This subsidy amount varies from month to month depending on changes in average international benchmark LPG rate and
foreign exchange rate.When international rates move up, government provides a higher subsidy
And when they come down, subsidy is cut.As per tax rules, GST on LPG has to be calculated at market rate of fuel
The government may choose to subsidise a part of price but tax will have to be paid at market rates.So, with fall in market price or
non-subsidised LPG price, tax incidence on subsidised cooking fuel has also come down, leading to current price reduction."Accordingly,
upfront cash payment by consumer of domestic LPG will also reduce by Rs 120.50 per cylinder
Domestic LPG consumer will now be required to make upfront cash payment of Rs 689 a cylinder in place of Rs 809.50 per cylinder," IOC
said.Subsidised cooking gas consumers will get Rs 194.01 per cylinder subsidy in their bank accounts for month of January
