Mumbai, July 3: Even as the Narendra Modi government basks in the glory of a successful launch of the Goods and Services Tax (GST), the common man has seen mixed cues, as prices of some products have gone higher, while those of some others have reduced. Reports said on Monday that households will have to shell out more for a cylinder of cooking gas or LPG (Liquefied Petroleum Gas) from this month, owing to the new tax regime combined with a reduction in subsidy.
LPG has been put in the 5 per cent GST slab, where earlier some states had absolutely no tax on the household essential and some others had a VAT between 2 to 4 per cent. Not only this, the common man will also have to pay more as installation, administration and documentation charges for new connections and also for the mandatory two-year inspection, reported Times of India. Additional cylinders have also been put under 18 per cent tax slab.
The price rise is expected to be anywhere between Rs 12 and Rs 15 per cylinder, in states that earlier levied no tax on the fuel. In other states, the rise will depend on the gap between the rate of GST on LPG and rate of VAT applicable earlier. Moreover, the amount of subsidy has also been reduced, effective June, 2017.
Speaking to the TOI about the reduction in subsidy, National Secretary of All India LPG Distributors Federation Vipul Purohit said, “The subsidy amount of Rs 119.85 paid to eligible consumers in Agra, for example, till June has also been reduced. According to the new notification, they will receive only Rs 107 in their bank accounts.” When put together, both these changes will effect the prices by Rs 32 per cylinder, depending on the state, said TOI.
Factors like transportation and storage logistics will be contribute to the difference in pricing between various states. It is pertinent here to mention that there has been no effect of GST on the subsidy, and that the subsidy amount varies every month, due to change in the gap with international price. On the other hand, the prices of commercial LP cylinders will come down by about Rs 69, due to GST. Earlier the total tax on LPG for commercial use attracted a tax levy of 22.5 per cent (8% excise duty and 14.5% VAT), while under GST, it has been put under the 18 per cent tax slab.