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Subsidised LPG price cut by Rs 5.91; non-subsidised rate reduced by Rs 120.50

Domestic cooking gas (LPG) price was cut by Rs 5.91 per cylinder on Monday, the second straight reduction in a month’s time due to the tax impact on the reduced market rate of the fuel.

This is the 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 the 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.”

On December 1, price of non-subsidised LPG was cut by Rs 133 per bottle.

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.

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. So, with the fall in market price or non-subsidised LPG price, the tax incidence on subsidised cooking fuel has also come down, leading to the current price reduction.

Subsidised cooking gas consumers will get Rs 194.01 per cylinder subsidy in their bank accounts for the month of January. The subsidy transfer in the customer’s bank account has been reduced from Rs 433.66 in November and Rs 308.60 in December.


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