GST and subsidy reduction to increase your monthly LPG bill

gasYour monthly LPG bill is set to rise by nearly Rs 32, thanks to the joint blow dealt by the Goods and Services Tax (GST) and a reduction in subsidy, say reports.

It might look like a relief that domestic LPG cylinders are placed under the lowest GST slab of 5 per cent. However, compared to the previous 2-4 per cent VAT applied by certain states, the overall money one shells out for LPG cylinders is going to increase from this month. The hike in price will depend from state to state, based on the VAT they used to charge earlier.

Moreover, some states did not apply taxes on LPG cylinders for domestic use. Households in these states will see a rise in prices by nearly Rs 12-13, said the report.

Your woes do not end here. Consumers will also have to bear a hike in prices for the two-year mandatory inspection, installation, administrative charges for documentation of new connections and additional cylinders since these services will now attract a GST rate of 18 per cent. The other whammy raising your LPG bill is the reduction in subsidy paid on LPG.

The current price of a 14.2 kg LPG cylinder in Mumbai is roughly Rs 554 and the subsidy received is about Rs 66. This price is going to increase by up to Rs 32, thanks to combined effect of both these issues.

This is in contradiction to the Finance Ministry’s claim that GST will lead to a decrease in costs of LPG cylinders. This holds true only for the cost of LPG cylinders for commercial purposes.

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