IOC reduces LPG cylinder price by Rs 6.52

On Friday, domestic cooking gas (LPG) price was cut by Rs 6.52 per cylinder on account of tax impact on the reduced market rate for the fuel. Indian Oil Corp (IOC), the country’s largest fuel retailer, said in a statement, the 14.2-kg subsidised domestic LPG cylinder will cost Rs 500.90 in the national capital from midnight tonight as against Rs 507.42 currently.

Apparently, the price reduction comes soon after six consecutive monthly hikes in rates since June. Rates had gone up by Rs 14.13 per cylinder June, prior to this price cut. With effect from November 1, Subsidised LPG rates were last hiked by Rs 2.94 per cylinder.

IOC said in a statement that non-subsidised or market priced LPG rates have been cut by a steep Rs 133 per cylinder to reflect fall in international oil rates and strengthening of the rupee. Currently, costing Rs 809.50 per 14.2-kg bottle in Delhi.

LPG consumers have to buy the fuel at market price. However the government has provided subsidises for 12 cylinders of 14.2-kg each per households in a year by providing the subsidy amount directly in bank accounts of users.

According to the changes in the average international benchmark LPG rate and foreign exchange rate, this subsidy amount varies from month to month. It is to be noted that When international rates move up, the government provides a higher subsidy and when they come down, subsidy is cut.

GST on LPG has to be calculated at the market rate of the fuel, as per tax rules. It is absolutely at the government’s discreation to choose to subsidise a part of the price but tax will have to be paid at market rates only. Thus, 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.

For the month of December, subsidised cooking gas consumers will get Rs 308.60 per cylinder subsidy in their bank accounts. In November, the subsidy transfer in the customer’s bank account has been reduced from Rs 433.66.

Also read: India’s Q2 GDP growth for July-September quarter falls to 7.1%