No benefit to consumers from lower VAT on LPG

New Delhi, Mar 13 (UNI) Consumers in the national capital will not benefit from the reduced VAT rates on domestic LPG from 12.5 to 4 per cent.

''There will be no change in prices at the consumer end. The gains would be used by oil firms to reduce their loses,'' Petroleum Minister Murli Deora said here today.

Finance Minister P Chidambaram in his Budget extended the 'Declared Goods' status for LPG supplied for domestic use, thereby attracting a uniform Central Sales Tax of 4 per cent across the country as against current rates.

It was only after the announcement that the Delhi government reduced the tax on cooking gas from 12.5 per cent to 4 per cent.

Mr Deora said the public sector oil firms were losing Rs 170 on sale of every LPG cylinder and the gain of about Rs 15 per cylinder (on account of lower VAT) would be used to partly cover the losses.

Fuel retailers - IOC, BPCL, HPCL and IBP - who lost Rs 9,680 crore this fiscal on account of selling LPG below cost price, would stand to gain about Rs 1,400 crore from the move, which they propose to use for offsetting part of the losses.

Prime Minister Manmohan Singh had called the Petroleum Minister and the Finance Minister to discuss the suggestions of the Rangarajan Committee report. This was the second meeting this week.

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