Domestic cooking gas (LPG) price will affect every household budget now as the price gets hiked by Rs 2.08 per cylinder, and non-subsidised gas by Rs 42.50 per bottle, said Indian Oil Corporation (IOCL). The increase comes after three straight monthly reduction in rates. The rise has been necessitated due to tax impact on increased market rate of the fuel, IOCL said in a statement.
Therefore, a 14.2 kg subsidised LPG cylinder will now cost Rs 495.61 as against Rs 493.53 in the national capital from March 1 onwards.
IOCL also said that non-subsidised or market-priced LPG rates have been hiked by Rs 42.50 per cylinder “mainly due to change in international price and foreign exchange fluctuations.” Thus, it will now cost Rs 701.50 per 14.2-kg cylinder in Delhi.
All LPG consumers 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.
According to tax rules, the goods and services tax 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 rise in market price or non-subsidised LPG price, the tax incidence on subsidised cooking fuel has also increased, leading to the current price hike.