New Delhi: Subsidized cooking gas, or liquefied petroleum gas (LPG) price was on Monday hiked by 1.76 per cylinder due to tax impact on the change in base price. Subsidized LPG with effect from Tuesday midnight will cost 498.02 per cylinder in Delhi as against 496.26 currently, a statement issued by Indian Oil Corp., the nation’s largest fuel retailer, said. All LPG consumers have to buy the fuel at market price. The government, however, subsidizes 12 cylinders of 14.2kg each per households in a year by providing the subsidy amount directly in bank accounts of users.

This subsidy amount varies from month to month depending on the changes in average international benchmark LPG rate and foreign exchange rate. When international rates move up, the government provides a higher subsidy. But as per tax rules, GST on LPG has to be calculated at the market rate of the fuel. The government may choose to subsidize a part of the price, but tax will have to be paid at market rates. This has led to increase in price. “The increase is mainly on account of GST on the revised price of domestic non-subsidized LPG," the statement said.