Continuing with the trend of taking ‘people friendly’ decisions, the NDA Government on Wednesday decided to put on hold for some time a hike in prices of cooking gas (lPG) cylinders as well as kerosene in certain states owing to state levies, saying that a decision will be taken on the matter after discussions with the concerned state governments.
This was announced by the Petroleum Ministry through an official statement, where it said that till discussions with state governments are not completed, status quo on prices of lPG and kerosene will remain as the scheduled hike in their prices has been put on hold.
At the same time though, the statement added that in states where owing to downward revision of levies, there has been a reduction in prices of these commodities, the reduced prices will come into force “in the interest of the consumers”.
In states, levies like octroi charges and transportation and entry costs are included in the prices of lPG cylinders and kerosene, which result in a hike in their prices. These taxes are quite high especially in states like Madhya Pradesh, Karnataka and Kerala and their inclusion in the actual costs of these ‘aam admi’ fuels had raised their prices.
The increase in state levies such as entry tax and octroi led to prices of domestic lPG rising in Kerala by Rs 4.50 per cylinder, Rs 3 in Karnataka, Rs 5.50 in Madhya Pradesh and Rs 1 per cylinder in Uttar Pradesh.
At the same though, in some States, a reduction in state levies has led to a cut in lPG prices by Rs 9.50 per cylinder in Assam, Rs 1.50 in Bihar and Rs 3 per cylinder in Maharashtra.
State-owned oil marketing companies (OMCs) incur a percentage of State Specific Costs (SSCs) owing to levies such as Entry Tax, Octroi, input tax restrictions on VAT. These become irrecoverable levies for them.
In order to ensure that revenue demands of certain states don’t become a burden for consumers across the country, the Government had introduced the scheme of SSCs in July 2012 to recover such irrecoverable levies from the consumers of areas levying such taxes. As per the SSCs scheme, these levies are due to be recovered this month, however the Government has decided to defer this exercise in order to insulate the consumers in these states from the resultant price increases of these sensitive items.