Cooking gas or Liquified Petroleum Gas (LPG) price was hiked by Rs 1.49 per cylinder today. Subsidised LPG cylinders will cost Rs 499.51 per cylinder (14.2 kg) in Delhi from 12 am on Saturday as against Rs 498.02 before.
In a statement issued by the Indian Oil Corp (IOC) on Friday, the price rise was mainly due to the tax incidence on the base price. It is notably the third consecutive hike in LPG rates that are revised on the first day of every month, based on average benchmark rate and foreign exchange rate in the previous month.
After a slight deduction to Rs 491.21 in May, the prices for a subsidized 14.2 kg cylinder this year were increased to Rs 493.55, Rs 496.26 and Rs 498.02 in June, July and August respectively.
While 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. This subsidy amount varies from month to month depending on the changes in average international benchmark LPG rate and foreign exchange rate.
When international rates move up, the government provides a higher subsidy. But 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. This has led to the increase in price.
The subsidy transfer in customers' bank account has been increased to Rs 320.49 per cylinder in September 2018 as against Rs 291.48 per cylinder in August 2018.
The price of non-subsidised LPG in Delhi will increase by Rs 30.50 per cylinder to Rs 829. This increase comes on back of Rs 35.50 per cylinder hike in August and Rs 55.50 in July. The balance Rs 29.01 (Rs 30.50 minus Rs 1.49) is being compensated to the customer by the increase in subsidy transfer to their bank account.