Liquefied Petroleum Gas (LPG) — popularly known as cooking gas — distributors today demanded Value Added Tax (VAT) exemption for the cooking gas in the domestic use.
"The government must abolish VAT in cooking gas following the same rule applied in kerosene," LP Gas Distributors' Association-Nepal Chandra Krishna Shrestha at an interaction with revenue authorities here today.
"It will reduce cost for the domestic users," he said, explaining that neighbouring India has also adopted 'No VAT' in cooking gas for domestic users. "The distributors should also be exempted from VAT net."
LPG distributors get just two per cent commission from LPG, so we should not be included in the tax net," he said.
LPG dealers also supported the distributors on the occasion.
"The government will not get benefit from VAT in LPG," said president of Federation of Gas Dealers Associations Gyaneshwor Acharya. "Only the bottlers are getting benefit from VAT refund."
However, Department of Inland Revenue (DRI) director general Tanka Mani Sharma, on the occasion, urged the LPG distributors, dealers, and sellers to cooperate in implementing VAT in the sector. "The government would simplify the entry into the VAT net," he said, adding that small technical problems will be sorted out through discussion with concerned Inland Revenue Offices.
During the interaction, acting general manager of Nepal Oil Corporation (NOC) Suresh Agrawal said that the government is implementing dual colour cooking gas cylinder to reduce the loss of the state entity.
"LPG bottlers, distributors, dealers and depots must support the move that benefits consumers," he said, adding that NOC is looking for their encouraging support.
The government has planned dual colour cylinders — red for domestic and blue for commercial purpose — from June 15 but it has further delayed due to recent agitation of LPG bottlers for a month. The government and bottlers have agreed to enforce dual colour cooking gas cylinders from July 16.
The state oil monopoly has been incurring huge losses from LPG because it has to sell cooking gas cylinders in subsidised rate.
According to NOC, it has around Rs 358.6 loss in one cylinder at current price.
However, the cooking gas traders suggested the government to start automatic pricing mechanism to recover the losses. The automatic pricing system will ensure the hike and drop of price according to the buying price transparently, they claimed.
Likewise, LPG import has also increased four times in a decade. The country used to import around 4,800 metric tonnes in a month in 2002-03 but the import has increased to 18,000 metric tonnes in the current fiscal year due to rising demand and urbanisation.
Currently, about one million households have been using nearly four million cooking gas cylinders in a month.