The states paying extra price for LPG cylinders and kerosene due to local taxes on oil companies might get an opportunity to heave a sigh of relief soon.
The Ministry of Petroleum and Natural Gas on Wednesday declared that the upward revision in Retail Selling Price (RSP) of domestic LPG and kerosene distributed through Public Distribution System (PDS) would be put on hold until the government holds a discussion on State Specific Costs (SSC).
Although the government has decided not to raise the prices of LPG and PDS kerosene as per the upward revision of July 2014, the downward revision in a few states will continue until the the scheme is reviewed.
The government introduced the SSC scheme in July 2012 to allow the public sector companies trading in oil to recover the extra amount they incurred as Entry Tax, Octroi and input tax restrictions on VAT in certain states. These local taxes came in addition to the sales tax and excise duty imposed by the state governments in India.
Additionally, the government wanted to ensure that not all consumers have to suffer for the revenue demands of certain states.
The levies incurred by the Public Sector Oil Marketing Companies (OMCs) are irrecoverable without the help of SSC scheme.
However, the government is taking into consideration the consumers' interest and is now trying not to burden them with added prices after the July 2014 revision, which is certain to increase the RSP of LPG and PDS kerosene.
If the 2014 revision had continued without government's intervention into it, the retail price of individual LPG cylinders in Kerala, Karnataka, Madhya Pradesh and Uttar Pradesh would have gone up by ₹4.50, ₹3, ₹5.50, and ₹1 respectively.
Meanwhile, in Assam, Bihar and Maharashtra, it would have come down by ₹9.50, ₹1.50 and ₹3 respectively.
The retail price of PDS kerosene, too, would have been changed; with increase in Haryana and Uttar Pradesh by 2 paisa and 8 paisa respectively and decrease ranging from ₹0.11 per litre in Maharashtra and ₹1.32 per litre in Navi Mumbai.
In addition, the OMCs in 2013, was authorised by the government to increase the retail price of domestic LPG across the country by ₹0.50 every month as they claimed that they are suffering losses.
However, the government increased the price of domestic LPG by ₹16.50 per cylinder on Tuesday. The hike is for the non-subsidised cylinders, which is purchased after the subsidy for 12 cylinders ends within a year.
The government has limited the consumers to 12 cylinders a year, after which they are liable to pay extra amount for each cylinder.