Offering the New Year’s gift to the people, the government announced that the prices of LPG cylinders will be reduced considerably. The price of subsidized LPG cylinder has been reduced to Rs 494.99 from Rs 500 while that of unsubsidized LPG cylinders be reduced by a whopping RS 120.50 as declared by the Indian Oil Corporation.
The cost of 14.2 kg subsidized LPG cylinder will be Rs. 494.99 in the national capital from first January 2019 as compared to its initial cost of Rs 500.90. The Indian Oil Corporation which is the largest fuel retailer in India stated in one of their briefings. This is the second time in a span of one month that the cost of LPG cylinders is being cut down. The prices of subsidized LPG was reduced by Rs. 6.52 per bottle on 1st December after a continuous rise in prices.
The two consecutive decreases in prices have zeroed the Rs 14.13 rise in the cost of LPG cylinder witnessed between June and November. IOC explained in one of the statements that the reduction in the price of unsubsidized LPG cylinder by Rs 120.5 is as a result of a reduction of LPG cylinder prices in the international market and also due to the improvement of US Dollar-rupee exchange rates.
All the LPG users will now have to buy the fuel at market price. The government, on the other hand, subsidized 14.2 kg LPG gas cylinder for every household per year by depositing the subsidy amount to the users’ accounts.
The subsidy amount is not fixed. It keeps varying every month as it is a subject of changes in the international benchmark LPG as well as the rate of foreign exchange.
The government offers higher subsidies when the exchange rates go up and vice versa. The GST on LPG is to be computed using the market rate and as per the tax rules. It is upon the government to choose whether or not to subsidize a fraction of the price. However, taxes are to be paid at fixed market rates.
Therefore, the taxes on subsidized cooking fuel have come down which has led to the reduction in the prices of unsubsidized LPG cylinders.
“So, the direct amount paid by the LPG gas users will also drop by Rs 120.50 per cylinder. As a result, the domestic users will pay Rs 689 per cylinder instead of the initial cost of Rs 809.50 per cylinder.” IOC said.
Rs 194.01 subsidy will be deposited directly to the bank accounts of the subsidized cooking gas users beginning January 2019. The transfer of subsidies into the consumers’ bank accounts had been reduced from Rs 433.66 in November and then later further reduced to Rs 308.60 in December.