LPG subsidy is off if you earn over Rs 10 lakh per year

FM Jaitley hopes GST regime will be ‘doable’ in 2016

In a major subsidy reform, the Narendra Modi government on Monday announced the scrapping of the LPG subsidy for “well-off” people whose annual taxable income is more than Rs 10 lakhs from January 2016.

The petroleum ministry said it was felt that consumers in the higher income bracket should get LPG cylinders at the market price. “Therefore, the government has decided that the benefit of LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs 10 lakhs in the previous financial year computed as per the Income-Tax Act, 1961,” said the ministry.

In the initial phase, consumers will have to give a “self-declaration” that his/her taxable income is less than Rs 10 lakhs to avail of the LPG subsidy. Petrol and diesel prices have already been decontrolled. After LPG, kerosene is the only other fuel which is still being subsidised by the government.

Finance minister Arun Jaitley has, meanwhile, expressed the hope that the ambitious GST regime will be “doable” in 2016. Mr Jaitley said he is in “continuous touch” with the Congress Party in a bid to persuade its leaders to cooperate. “I hope that in the next session (of Parliament), the GST (Goods and Services Tax) will make headway,” he said.

All households in India are now entitled to get 12 LPG cylinders of 14.2-kg each at a subsidised rate of Rs 419.26, while the market price is Rs 608. At present, there are 163.5 million LPG consumers in India. With the implementation of the PAHAL scheme (Direct Benefit Transfer on LPG), the subsidy is being transferred directly to bank accounts of 147.8 million LPG consumers. The scheme’s objective was to ensure subsidy benefits go to the targeted group.

The government had also urged all well-to-do households to voluntarily giving up their LPG subsidy. “So far, 57.50 lakh LPG consumers have opted out of the LPG subsidy voluntarily, heeding the call by the Prime Minister,” the petroleum ministry said. It said the subsidy saved from the “GiveitUp” campaign was being utilised to provide new connections to BPL families.

The subsidy payout on LPG in 2014-15 was Rs 40,551 crores, which this fiscal will be less than half as oil prices have slumped to a six-year low. In April-September, the subsidy outgo was Rs 8,814 crores.