Union Government links LPG subsidy to income

245

What :Taxpayers with an annual income of more than Rs 10 lakh will not get sub sidised LPG cylinders from the new year.
Who : Announced by Union Government
When : 28th December ,2015

IN ITS first decisive move towards curbing the supply of subsidised cooking gas, the NDA government today announced that taxpayers with an annual income of more than Rs 10 lakh will not get subsidised LPG cylinders from the new year.

At present, all households are entitled to 12 cylinders of 14.2-kg each at subsidised rate of Rs 419.26, while the market price of each cylinder is Rs 608. In the assessment year 2014-15, a total of 20.26 lakh assesses were reported as having a taxable income above Rs 10 lakh, according to the Central Board of Direct Taxes data.

Justifying the latest move, a statement issued by the Union Petroleum Ministry said “the government has decided that the benefit of the LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs 10 lakh during the previous financial year computed as per the Income Tax Act, 1961.”

This would, however, be done initially on “self-declaration basis while booking cylinders from January 2016 onwards”, it added.

On March 27 this year, the government had asked “well-off people” to voluntarily give up using subsidised LPG and instead buy cooking fuel at market price. So far, of the estimated 14.78 crore LPG consumers in the country, over 52 lakh are reported to have given up access to subsidised fuel voluntarily.

“While many consumers have given up subsidy voluntarily, it is felt that consumers in the higher income bracket should get LPG cylinders at the market price,” the statement said.

In September 2012, the UPA government had restricted the number of subsidised domestic cylinders per household on an annual basis to six, and then revised it to nine. The cap was subsequently revised in January 2014 to 12 cylinders a year, starting April 1.

During fiscal 2014-15, the subsidy payout on LPG was estimated at Rs 40,551 crore. During April-September this fiscal, the subsidy outgo was Rs 8,814 crore. The total payout this fiscal is expected to be far lower than last year as oil prices have receded sharply.

The number of LPG consumers in the country fell from 16.35 crore to 14.78 crore after the start of Direct Benefit Transfer on LPG (DBTL) scheme that eliminated inactive customers and duplication in the rolls.

The subsidy saved from the ‘Give it Up’ campaign, the Ministry said, is being used for providing new connections to the BPL families. This, according to the ministry, enables the allocation of LPG to poor households and ensures that they replace the use of fuels such as kerosene, coal, fuel wood.

According to a Petroleum Ministry official, every LPG consumer who surrenders cooking gas subsidy is linked to a BPL household that gets the LPG connection in turn.

As on December 7, according to Ministry statistics, a total of 52,58,841 consumers have given up or surrendered their subsidy. Taking into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 184.93 per cylinder (in the Delhi market) for the period from April to September, 2015, the annual saving would be approximately Rs 1,167 crore.