A GST of 5% is levied on the domestic LPG cylinders; no State imposes 55% tax
Social media users are sharing a post with some statistics on the cost of domestic LPG cylinders, claiming that the state governments in each different country tax LPG cylinders at a rate of 55% while the federal government only charges 5%. Let's investigate the assertion stated in the post.
The post contains a wealth of information about the factors that determine the cost of a home LPG cylinder. Let us attempt to verify each of them separately.
Do State governments impose a 55% tax on LPG?
The household LPG cylinder is subject to the Goods and Services Tax (GST). There are no additional levies that the federal or state governments impose on LPG cylinders. The Central Board of Indirect Taxes and Customs (CBIC) website states that home LPG cylinders are subject to a 5% GST slab (comprising of 2.5% CGST and 2.5 percent SGST). The same data is also included in the "Ready Reckoner" paper (November 2020) that the Indian government's Petroleum Planning & Analysis Cell (PPAC) released.
For example, the 14.2 kg domestic LPG cylinder bill in the below photo can be seen. It can be observed in the bill that there is a CGST of 2.5% and an SGST of 2.5% (i.e., a total of 5% GST). So, there is no basis for the claim that the State government impose a tax of 55% on the LPG cylinders.
How much is the dealer’s commission?.
In the post, the dealer's commission is stated as Rs. 5.50. Nonetheless, the dealer/distributor's commission on a 14.2 kilogram LPG gas cylinder is Rs. 61.84, according to the PPAC website. The government issued an order in July 2019 that raised the dealer's commission to Rs. 61.84. You can read it here. It was discovered that the Rs. 61.84 comprises Rs. 27.60 for "Delivery charges" and Rs. 34.24 for "Establishment charges." Therefore, the dealer's commission figures provided in the post are also incorrect.
Different components of the domestic LPG cylinder price:
The Ministry of Petroleum and Natural Gas published the "Indian Petroleum & Natural Gas Statistics 2019-20" report, which included information on household LPG cylinder prices in four major Indian cities as of April 1, 2020. Here are the specifics of Delhi's cylinder pricing as of June 1, 2021. A cylinder's "market determined price," "distributor commission," and "GST" are all included in the retail price. We've previously covered the distributor commission and GST. The elements of the "market determined price" are listed below.
The PPAC's "Ready Reckoner" (June 2018) publication contains information on the various elements of "Market Determined Price." The cost of several of these components varies depending on the state. However, other factors like as geography and uncompensated costs under PAHAL account for the disparity rather than taxes.
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Anuj Kumar Tomar
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