Govt mulling uniform tax for LPG consumers

Move seen to help reduce pilferage, ease availability of cooking fuel for the poor; currently 60% of households in the country have access to connections, while it is 25% in rural areas

The government is mulling uniformity in the taxation regime applicable for liquefied petroleum gas (LPG) sales, to bring all cooking gas consumers under the same tax structure. The idea is to cut pilferage of cylinders that occurs as a result of differential tax rates, Petroleum Minister Dharmendra Pradhan said.

“We have sought help from the revenue department, ministry of finance, for having a uniform tax pattern for all kinds of LPG customers. All the oil companies and the ministry are working to ease availability of cooking fuel for the poor,” Pradhan said on the sidelines of an oil industry event here, refusing to share details.

Currently, commercial consumers have to bear eight per cent basic Cenvat duty as central excise on LPG sales, while domestic consumers are completely exempt. The differential taxation on household cooking fuel leads to pilferage.

“What we found is there are different tax patterns for different categories of customers — subsidised, non-subsidised, commercial and industrial. If there is not much impact on revenue due to having a uniform tax pattern, it will further help keeping in control black marketing,” Pradhan said.

He said 60 per cent of households in the country have access to LPG connections. In rural areas, 25 per cent do. “The aim is now to provide LPG connections to 75 per cent of households across the country over the next four years,” he said.

The ministry’s announcement on the need to modify the tax rate applicable for LPG follows a similar call made by Chief Economic Advisor (CEA) Arvind Subramanian in July. “The government should look at the need to overhaul the tax structure as a big differential between commercial and subsidised LPG was creating a big gap,” Subramanian had said.

The current issue of uniform excise duty on LPG consumers is separate from the issue of taxation of LPG subsidy under the direct benefits transfer (DBT) scheme. The finance ministry had clarified in March this year that the LPG subsidy received by individuals in their bank accounts will continue to be exempt from income tax.