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Cooking gas costlier by Rs. 24

Staff Correspondent

Hike linked to several factors including sudden raise in entry tax

BHOPAL: Citizens across Madhya Pradesh are in a state of shock as the domestic LPG cooking gas cylinder price has shot up by Rs. 24 from April 8 due to several interlinked factors, including a sudden hike in entry tax imposed by the State Government after the VAT regime came into force and the simultaneous decision by the oil companies to increase the basic issue price of LPG cylinders by Rs. 23.01.

The LPG consumers were paying Rs. 304.80 for per cylinder in the State till March 31 this year. From April 8 onwards, the price has gone up to Rs. 328.95. Before the VAT regime came into force on April 1, the tax burden on the LPG cylinder was 13.8 per cent. This included commercial tax and surcharge. Besides, there was also one per cent entry tax. The total tax burden on each LPG cylinder was 14.8 per cent.

However, since kitchen gas has been brought under the declared goods list in the 2006-07 Budget, the State Governments could impose only 4 per cent commercial tax on it. The thinking behind the decision to bring LPG on the declared goods list was moulded by the fact that the States were taxing LPG at very high rates. Under the VAT, the State Government had to fix 4 per cent VAT on LPG cylinders from April 1 onwards but at the same time, it also raised the entry tax from 1 per cent charged till March 31, 2006, to 9.5 per cent.

With the hike in entry tax, the LPG consumers in the State have been denied the benefit of a decreased 4 per cent VAT and what has further added to their woes is the decision by the oil companies to increase the basic issue price of LPG cylinders by Rs. 23.01 from April 8 onwards. Following the hike, the State Government came under attack from a section of the media and it was projected that the hike was due to higher entry tax. The State Government has countered this with the argument that the kitchen gas price has gone up due to an across-the-board increase in the "basic issue price" by the oil companies. The State Government has also emphasised that the price of a kitchen gas cylinder would have come down by Rs. 2.66 if the oil companies had not raised the basic issue price.

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