Govt considers waiving VAT on cooking gas

- Post Report, Kathmandu

Jan 18, 2017-

The Ministry of Supplies has proposed to waive value added tax (VAT) on cooking gas in a bid to provide relief to ordinary consumers.

Currently, the general public has to pay Rs148.75 VAT on a cylinder of LPG (liquefied petroleum gas) while businesses with an annual turnover of more than Rs5 million are exempt from the tax.

Supplies Secretary Prem Kumar Rai said talks would be held with the Finance Ministry on this issue soon to end the “discriminatory” practice.

“We are mainly concerned about this unfair practice which is adding financial burden on the general public while the business community remains unaffected by the tax provision,” he said. According to Rai, big business houses and gas bottlers are getting VAT refunds. 

The Supplies Ministry is currently mulling whether to completely waive VAT on cooking gas or distribute the tax burden equally among all types of consumers.

“If the Finance Ministry expresses its inability to waive VAT completely, we will push for a provision that will require business houses to pay it too,” Rai said. 

Currently, cooking gas is sold at a subsidised price of Rs1,325 per cylinder. As per the ministry, most governments around the world do not levy VAT on essential products, including cooking gas. 

Nepal Oil Corporation (NOC) imports cooking gas at Rs906.89 per cylinder from Indian Oil Corporation’s Barauni refinery. The government collects Rs204.29 in tax including 13 percent VAT per cylinder.

Rs1.04 insurance cost, Rs8.52 administration cost, Rs50 infrastructure fee and a markup of Rs232.50 per cylinder are added to the cost price. 

Gas dealers have also been demanding that the government waive VAT on cooking gas. “The government should not add a financial burden on the people by taxing essential goods. It should not focus only on maximising revenue collection,” said Gyaneshwor Aryal, president of the Gas Dealers’ Federation Nepal. 

The commercial sector consumes about 60 percent of the cooking gas imported into the country, said Rajesh Dahal, general secretary of the Gas Dealers Association. 

Gas dealers have launched a protest demanding that the government waive VAT on cooking gas or raise the commission rate of resellers. 

They have stopped selling LPG in western Nepal for the last few days after bottling plants slashed their commission by Rs18 per cylinder to Rs32. “We will soon extend our protest to other parts of the country if our demand is not met,” Dahal said. 

Published: 18-01-2017 09:35

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