With the launch of the modified direct benefit transfer for LPG (MDBTL) on Saturday in five districts of Punjab, the state government will make more profit with an increase of Rs 21.60 in value added tax (VAT) per cylinder.
The state government has increased the VAT amount on the sale of each cylinder to Rs 40.83 from earlier Rs 19.22.
As the beneficiaries of the scheme will feel the heat due to extra VAT, the state government is set to make earnings of 4.4% VAT on the billed amount of each LPG cylinder, which has turned double.
The five districts — Jalandhar, Nawanshahr, Ludhiana, Barnala and Faridkot — are part of 51 districts across the country where the first phase of the scheme was implemented.
Till Friday, a domestic cylinder cost Rs 437 in these five districts but now the market price of an unsubsidised cylinder will be Rs 928 to the beneficiaries.
The subsidy under the scheme will be deposited to the Aadhaar-linked bank accounts of the beneficiaries.
An official said the excise and taxation department charged 4.4% VAT on the billed amount of each LPG cylinder.
He said before the scheme started, a domestic cylinder cost Rs 437 and the government was getting Rs 19.22 in the form of VAT. But as the billing amount of each cylinder has been increased to Rs 928, VAT percentage too has been increased to Rs 40.83 per refill, he added.
He said there are 5 lakh domestic LPG connections of three oil companies in Jalandhar district. These companies are Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum.
The state government will make an extra income of over Rs 1.5 crore in the form of VAT on the sale of one cylinder in Jalandhar district, he said.
In Nawanshahr, which has 1.8 lakh domestic LPG connections, the department will earn an extra `38 lakh as VAT on the sale of one cylinder.
The ministry of petroleum and natural gas has already written to chief minister Parkash Singh Badal on November 7 and requested that VAT be changed from the ad-valorem (the system of fixed percentage) to one based on quantity of gas sold (per kg basis.)
In the letter, union petroleum minister Dharmendra Pradhan said the increased tax amount could affect the popularity of the modified scheme as the sale would be done at the market price, burdening consumers with higher VAT.