GST on LPG Cylinder: GST Rates, Applicability, and Impact

Know more about the GST rates on LPG cylinders, their applicability and the impact on consumers and businesses.
Business Loan
3 min
02 Aug 2024
The Goods and Services Tax (GST) on LPG cylinders in India varies for domestic and commercial usage. Domestic LPG cylinders are taxed at a lower rate to keep household fuel costs affordable, while commercial cylinders attract a higher GST rate.

What is the GST on LPG cylinders?

The Goods and Services Tax (GST) on LPG cylinders in India applies to both domestic and commercial usage. LPG (Liquefied Petroleum Gas) is a crucial fuel source, especially in households. For domestic LPG cylinders, the GST rate is generally lower to keep the fuel affordable for households. However, commercial LPG cylinders attract a higher GST rate. This differential taxation aims to balance the government's revenue needs with the essential nature of LPG for household cooking. Businesses dealing in LPG cylinders must comply with GST regulations, ensuring proper tax payment and invoicing.

Applicability of GST on cylinders and LPG

The applicability of GST on LPG cylinders and LPG gas itself is determined by their usage—domestic or commercial. Domestic LPG cylinders, typically used for household cooking, attract a lower GST rate, as they are considered essential goods. Conversely, commercial LPG cylinders, used in industries and businesses, are taxed at a higher rate. This distinction is vital for both consumers and suppliers, as it affects the overall cost of LPG. All suppliers must be registered under GST to sell LPG cylinders and are required to issue tax invoices, ensuring compliance with GST laws.

GST rate and HSN code on LPG cylinders 

ProductGST rateHSN code
Domestic LPG cylinders5%2711
Commercial LPG cylinders18%2711


Claims for ITC on LPG cylinder purchases

Businesses purchasing LPG cylinders for commercial purposes can claim Input Tax Credit (ITC) under the GST regime. This means they can offset the GST paid on these purchases against their GST liability. However, this benefit is only available for commercial LPG cylinders, not for domestic ones. To claim ITC, businesses must ensure that their suppliers are GST-registered and that proper tax invoices are issued. The claim process requires meticulous record-keeping and compliance with GST regulations. By availing of ITC, businesses can reduce their overall tax burden, enhancing cash flow and operational efficiency. Understanding the GST rates applicable to LPG and the ITC claim process is crucial for businesses to manage their finances effectively.

State-wise tax on LPG in India

StateDomestic LPG taxCommercial LPG tax
Maharashtra5%18%
Gujarat5%18%
Tamil Nadu5%18%
West Bengal5%18%


Example of LPG tax breakup

TypeBase priceGSTTotal price
Domestic LPGRs. 600Rs. 30Rs. 630
Commercial LPGRs. 1,000Rs. 180Rs. 1,180


Conclusion

Understanding the GST rates and applicability on LPG cylinders is crucial for both consumers and businesses. While domestic LPG cylinders benefit from lower GST rates, commercial cylinders attract higher rates. Businesses can further benefit by claiming input tax credits on commercial LPG purchases, reducing their overall tax liability. It's essential for businesses to comply with GST regulations to avail these benefits. Additionally, variations in state taxes and the tax breakup on LPG further highlight the importance of proper tax planning.

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Frequently asked questions

What is the GST on cylinders?
The Goods and Services Tax (GST) on LPG cylinders in India varies based on their usage. Domestic LPG cylinders, used primarily for household cooking, are taxed at a lower rate of 5%. In contrast, commercial LPG cylinders, utilised in businesses and industries, attract a higher GST rate of 18%. This differential tax structure aims to keep essential commodities affordable for households while ensuring appropriate taxation for commercial use.

Can we claim GST on LPG gas?
Yes, GST on LPG gas can be claimed as Input Tax Credit (ITC) if the LPG is used for commercial purposes. Businesses purchasing LPG for business activities can offset the GST paid against their GST liability. However, this does not apply to domestic LPG cylinders, which are typically used for household cooking. To claim ITC, businesses must ensure proper GST registration and that tax invoices are maintained. This helps reduce overall tax liability and improves cash flow.

What is the GST rate for LPG gas stoves?
The GST rate for LPG gas stoves in India is set at 18%. This rate applies to gas stoves used for both domestic and commercial purposes. LPG gas stoves are considered kitchen appliances and are classified under the 18% GST slab, as they are not deemed essential items like domestic LPG cylinders. Businesses and consumers should factor in this GST rate when purchasing gas stoves, as it impacts the overall cost.

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