Your subsidised LPG cylinder price has just been cut by Rs 6.5, but it is market rate cylinder that gets this big relief

Domestic cooking gas (LPG) price was cut by Rs 6.52 per cylinder on Friday. Now, a 14.2-kg subsidised LPG cylinder will cost Rs 500.90 in Delhi from Friday midnight. The subsidised LPP cylinder was being sold at a price of Rs 507.42 till now. The rate cut was on account of tax impact on the reduced market rate for the fuel. 

Subsidised LPG rates were last hiked by Rs 2.94 per cylinder with effect from November 1. This price reduction comes after six consecutive monthly hikes in rates since June.

On the other hand, the non-subsidised or market priced LPG rates have been cut by Rs 133 per cylinder, to reflect the fall in international oil rates and strengthening of the rupee, IOC said. These cylinders will cost Rs 809.50 per 14.2-kg bottle in Delhi.

All LPG consumers have to buy the fuel at market price. The government, however, subsidises 12 cylinders of 14.2-kg each per households in a year by providing the subsidy amount directly in bank accounts of users.

As per tax rules, GST on LPG has to be calculated at the market rate of the fuel. The government may choose to subsidise a part of the price but tax will have to be paid at market rates.

This subsidy amount varies from month to month depending on the changes in the average international benchmark LPG rate and foreign exchange rate.

Subsidised cooking gas consumers will get Rs 308.60 per cylinder subsidy in their bank accounts for the month of December. The subsidy transfer in the customer's bank account has been reduced from Rs 433.66 in November.