New Delhi: Domestic cooking gas (LPG) price was cut by Rs 1.46 per cylinder and non-subsidised LPG rates have reduced by Rs 30 per cylinder as effective from Thursday afternoon. 

This is the third straight monthly reduction in LPG rate. On December 1, subsidised LPG price was cut by Rs 6.52 per bottle and by Rs 5.91 on January 1.
IOC said non-subsidised or market priced LPG rates have been cut by a Rs 30 per cylinder "due to fall in price of LPG in international market and strengthening of US dollar-rupee exchange rate".

The reduction comes on the back of a steep Rs 120.50 cut on January 1 and Rs 133 on December 1. 

All LPG consumers buy the fuel at market price. The government, however, subsidises 12 cylinders of 14.2-kg each per households in a year by providing the subsidy amount directly in bank accounts of users.

This subsidy amount varies from month to month depending on the changes in the average international benchmark LPG rate and foreign exchange rate. Then international rates move up, the government provides a higher subsidy. And when they come down, subsidy is cut.

As per tax rules, GST on LPG has to be calculated at the market rate of the fuel. The government may choose to subsidise a part of the price but tax will have to be paid at market rates.

So, with the fall in market price or non-subsidised LPG price, the tax incidence on subsidised cooking fuel has also come down, leading to the current price reduction.