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VAT on Market Price to Push LPG Cylinder Cost up by Rs 30
December, 16th 2014

LPG consumers may have to shell out more money to buy cooking gas under the modified Direct Benefit Transfer for LPG (DBTL) as the state government now levies VAT on the market price of LPG cylinders as against the earlier practice of levying the tax on the subsidised price. At a recent meeting with the governments of Telangana and Andhra Pradesh here, oil marketing companies have requested the governments to make VAT specific (in Rs/kg) for all LPG consumers instead of as ad valorem (if applicable) as now.

In a memorandum to the chief secretaries of TS and AP, the companies noted that due to ad valorem 5 pc tax on a cylinder, DBTL consumers would have to bear a higher VAT as the sale would happen at the market price.

“For example, in the pre-DBTL scenario, 5 pc VAT was levied on the subsidised selling price of cylinder which amounted to Rs 444. The VAT amounted to Rs 21 then. But, in modified DBTL, 5 pc VAT is calculated on the selling price of Rs 1,000, amounting to Rs 50.

Companies cannot reimburse the VAT to cash transfer compliant consumers who have to pay Rs 30 more per cylinder. It is a notional loss for the state government if VAT is made specific,” explained an official on the condition of anonymity.

Madhukar Ingole, state coordinator for oil marketing companies, when contacted, confirmed that the ministry and oil marketing companies had approached the state governments but refused to divulge details.

The governments of Kerala, Punjab and Pondicherry have already made VAT specific. The scheme was launched in three districts of TS and nine of AP on November 15.

 
 
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