The government has deferred hike in LPG and kerosene prices in states including Karnataka, Madhya Pradesh and Kerala due to increase in local levies in these states that has led to higher fuel prices. The Oil Ministry has deferred hike on pending consultations with the state governments on state specific levies.
The increase in state levies such as entry tax and octroi had already 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 Re 1 per cylinder in Uttar Pradesh. Additionally, there was also a small increase of 2 paise and 8 paise in PDS kerosene rates in Haryana and Uttar Pradesh, respectively.
On the other hand, a reduction in state levies 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. Rates of kerosene sold through the public distribution system fell by 11 paise per litre in Maharashtra and Rs 1.32 per litre in Navi Mumbai.
Besides excise duty levied by the Central government and sales tax or VAT by state governments, certain other local levies such as entry tax, octroi and input tax restrictions on VAT have been levied in some states. In view of these, Petroleum and Natural Gas Ministry on deferred hiking State-specific costs (SSC) till a review was done with the States.
In July 2012, the UPA Government introduced SSC to recover levies from states imposing such taxes. This had led to an increase in domestic LPG and PDS kerosene prices in some states, while in some the prices had come down. However, in the interest of consumers, the benefit of reduction in domestic LPG and PDS kerosene RSP in the states, where applicable, would remain in force till the review of SSC scheme is carried out by the government.
