Change in subsidy rules: Rupee millionaires, if you did not give it up, get set to lose it

By: The Telegraph, Calcutta
Updated: 29 Dec 2015 08:47 AM
New Delhi: Consumers with a taxable income of more than Rs 10 lakh in the last financial year will no longer be eligible for the subsidy on cooking gas cylinders from next month.

The government announced the change in subsidy rules that will winnow about 18 lakh LPG consumers - or roughly 5 per cent of the taxpayers' base of 3.65 crore - from the number of beneficiaries of the subsidy.

Officially, there are 16.35 crore LPG consumers in the country. However, the figure is said to be around 14.70 crore after eliminating duplicate and inactive customers.

A back-of-the-book calculation shows that the government could save as much as Rs 432 crore on its LPG subsidy bill in a full year. The move is part of the government's efforts to trim its LPG subsidy bill, which amounted to Rs 40,591 crore in 2014-15.

During April-September, the outgo on LPG subsidy was Rs 8,814 crore, largely the result of the dramatic slump in global crude oil prices.

At present, all households are entitled to 12 cylinders of 14.2kg each at a subsidised rate of Rs 419.26 in Delhi while the market price is Rs 608. In Calcutta, the market price is Rs 637.50 per cylinder while the subsidy amounts to Rs 216.24.

Earlier this year, the government had urged well-heeled consumers to voluntarily give up their rights to the LPG subsidy through a well-orchestrated campaign over radio and television.

So far, over 57.5 lakh LPG consumers have given up subsidies. It is not known how many of the 18 lakh taxpayers in the top tax brackets have voluntarily given up the subsidy.

At the end of November, data given in response to a question raised in the Lok Sabha revealed that Maharashtra had the highest number of LPG consumers who had voluntarily given up the subsidy at 8.19 lakh followed by Uttar Pradesh with 6.35 lakh.

"While many consumers have given up subsidy voluntarily, it is felt that consumers in the higher income bracket should get LPG cylinders at the market price," said a note issued by the government.

The government, it said, "has decided that the benefit of the LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs 10 lakh during the previous financial year computed as per the Income Tax Act, 1961".

A senior oil ministry official clarified that an individual's taxable income would be taken into consideration while determining eligibility for the LPG subsidy and not the combined income of the household.

The government said it placed its trust in the citizens of the country and would, therefore, allow consumers to give up the subsidy on a "self-declaration basis while booking cylinders from January 2016 onwards".

The previous UPA government had restricted the number of subsidised gas cylinders per household to six per year in September 2012 but raised it to nine in January 2013.

The limit was revised in January 2014 to 12 cylinders a year, starting April 1.

The subsidy for 12 cylinders in a year is paid directly into the bank account of consumers.