New Delhi: Finance Ministry today clarified that LPG subsidy received by individuals in their bank accounts will continue to be exempt from income tax. The clarification follows doubts being raised by tax experts over an amendment in Finance Bill, 2015 that expanded the definition of taxable income to include subsidies, grants, cash incentive and duty drawback.
“The provision in the Finance Bill, 2015, will not affect the LPG subsidy and other welfare subsidies received by individuals,” the Ministry said in a statement.
The Income Computation and Disclosure Standards (ICDS) is applicable to persons having income chargeable under the head ‘Profits and gains of business or profession' or ‘Income from other sources' and following Mercantile System of Accounting.
This, the statement said, is not applicable to individuals not having any income chargeable under the head ‘Profits and gains of business or profession' and receiving LPG subsidy or any other subsidy which is for the welfare of the individual. The Finance Bill, 2015 (passed by Lok Sabha on April 30) proposes to align the definition of income with that provided in ICDS for this purpose, it added.
The central government notifies ICDS for any class of assessees or for any class of income.Beginning with 54 districts last fiscal, the programme to enable consumers to buy domestic cooking gas at market price has expanded to entire country from April 1. The government continues to subsidise 12 cylinders of 14.2-kg each to households in a year.
This subsidy is paid directly into bank accounts of users and the beneficiary then uses it to buy cooking gas at market price.
The subsidy transfer this month is Rs 198.18 per cylinder. It was Rs 203.18 in the previous month.