GST Impact on LPG and Gas Industry

Goods and Services Tax(GST) is the most significant reform in the history of indirect taxation in the country. Earlier a plethora of taxes were charged throughout the states in the entire country. GST is an improvement over the previous tax system since it centralizes the taxation system to a large extent. It is now easy for the common man to understand the percentage of indirect taxes that they are charged on any service. GST as a taxation system is aligned with the government's idea of a common national market.

The GST system was rolled out in July 2017. In total, the GST Council fixed a percentage of taxation on 1,211 items. GST Council has put 1300 goods and 500 services under five  GST slabs, 0%,5%, 12%, 18% and 28% where most of the items are covered under the 18% slab since the government decided to put only luxury items under the high-end 28% tax slab, so about 177 items in the 28% slab were moved to 18% tax slab.

Implementation of GST has resulted in a decrease in the tax burden for the consumers. Since the government plans on developing a synchronized national market, GST could help in boosting the position of Indian market globally.

One of the significant benefits of Goods and Services Tax is the transparency that it offers to the taxpayers. The earlier indirect tax system was so complicated that only a handful number of people understood the system.

New features of GST

Before the implementation of GST, the taxes levied on goods and services were separated. The Central Government had control over the taxation on goods manufacture and the State Government had complete autonomy in the taxation on the sales of goods.

Post implementation of GST, both Centre and state have the power to levy and collect taxes.

Highlights of the GST rule on gas

• Post the GST regime; the domestic cylinder prices have increased to 32 rupees per cylinder. This is the sharpest increase since the last six years. Last time there was such a significant increase in the prices of LPG, it rose by 50 rupees, which happened due to the rise in oil prices.

• All households will be receiving 12 subsidized gas cylinders over the span of one year. If someone requires more than 12 cylinders in a year, they will be charged a GST of 18% on the additional cylinder.

• The services on gas cylinders will be charged an 18% GST on the installation, inspection and other emergency services.

• For the states which didn't charge any taxes on the LPG cylinders, the prices went up by 12 rupees and 15 rupees.

• The LPG cylinders by 69 Rupees. Earlier, the commercial LPG cylinders attracted taxes that amounted to a total of 22.5% which included VAT and excise duty, under the GST regime, only 18% taxes are charged.

• LPG cylinder that cost 1121 will now cost 1052 in Delhi.

GST Impact on Cooking Gas

• The new GST rule isn't favorable for the domestic gas users, but it is beneficial for the commercial users. According to the new GST regime, the domestic cooking gas prices are supposed to go up by 32 rupees. This increase in the cooking gas is due to two primary reasons. The first reason being the implementation of the new taxation system, GST and the second reason being the decrease in the subsidies granted. The price of the gas also depends on the state in which the consumer resides.

• In states like Delhi, the green fuel was not being charged any tax but now it'll face an increase of 12-15 rupees in the gas prices. Presently, the cost of a 14.2 kg LPG in Delhi is 564 rupees.

• The domestic cylinder prices have increased to 32 rupees per cylinder. This is the sharpest increase since the last six years. Last time there was such a significant increase in the prices of LPG, it rose by 50 rupees, which happened due to the rise in oil prices.

• LPG consumers across the country will also be required to pay taxes of 18% over the services linked to the gas connection as well. The services which will attract a GST of 18% include installation, inspection, administration expense, etc