Private LPG importers not to pay Agri Infra Cess on LPG, Propane, Butane

After cutting down cost prices of LPG for PSUs, some relief in line for private LPG marketers, technically known as Parallel Marketers as the Finance Ministry has exempted import of LPG, Liquifued Propane and Liquified Butane from Agriculture Infrastructure Development Cess (AIDC). This is expected to benefit more price of auto LPG.

NIL duty will be effective from September 01, a Finance Ministry notification said. It may be noted that Liquefied Petroleum Gas (LPG) is a blend of light hydrocarbon compounds. It mainly consists of butane or propane or a mixture of both.

• Also Read: Data Focus: What is the cost of the LPG ‘gift’?

This move has come days after government cut the cost prices of domestic LOG cylinder sold by PSU OMC. Following the cut, the price has come down to around ₹900 and ₹700 for non Ujjawala and Ujjawla Consumers.

According to Petroleum Planning &Analysis Cell (PPAC), research cell of the Oil Ministry, Basic Customs duty is Nil for import of domestic LPG sold to household consumers (including non-domestic exempted category) by PSU Oil Marketing Companies. However, for private importers, Basic Customs duty rate is 5 per cent and AIDC 15 per cent for other importers of domestic LPG. Similar arrangement is for Butane and Propane. With the new notification, Basic Custom Duty will stay for private importers. Also, there is no change in Counter Vailing Duty (CVD), imposed in lieu of IGST, which is 18 per cent for private importers (5 per cent for PSU OMC)

• Also Read: PSU oil marketing companies to bear LPG price cut for non-Ujjawala consumers

LPG marketing in India is carried out by public sector oil marketing companies (i.e. IOCL, BPCL and HPCL) as well as by private parties under the Parallel Marketing System (PMS). Under PMS, private parties can import LPG and market imported LPG in the country at market determined rates. No subsidy is available from Government for sales by PMS in the domestic segment.

As per information received by PPAC from 104 parallel marketeers (PMs), they had sold 136.3 TMT during the month of Mar 2023 and 1577.0 TMT during the period Apr 2022 – Mar 2023. This amounts to a market share of 5.1 per cent for PMs in total LPG sales. Out of the total LPG sold in the country, 82.8 per cent was in the domestic segment, 15.9 per cent in the commercial/bulk segment and balance 1.3 per cent in the automotive segment. The market share of PMS was around 0.9 per cent in the domestic segment, 21.6 per cent in the commercial/bulk segment and 72.5 per cent in the automotive segment during Apr 2022 – Mar 2023.

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