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
| Product | GST rate | HSN code |
| Domestic LPG cylinders | 5% | 2711 |
| Commercial LPG cylinders | 18% | 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
| State | Domestic LPG tax | Commercial LPG tax |
| Maharashtra | 5% | 18% |
| Gujarat | 5% | 18% |
| Tamil Nadu | 5% | 18% |
| West Bengal | 5% | 18% |
Example of LPG tax breakup
| Type | Base price | GST | Total price |
| Domestic LPG | Rs. 600 | Rs. 30 | Rs. 630 |
| Commercial LPG | Rs. 1,000 | Rs. 180 | Rs. 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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