Government may do away with LPG subsidy for rich: Finance Minister Arun Jaitley

NEW DELHI: After ending subsidy on diesel, the government is considering stopping the sale of cheap cooking gas to the relatively well-off, finance minister Arun Jaitley said on Friday. The minister said foreign investment limit in insurance may be raised soon and a constitutional amendment to introduce the goods & services tax could be moved in the winter session of Parliament, which begins on Monday. He also raised concerns about excessive tax litigation, saying it runs the risk of undermining business sentiment.

"The next important decision India will have to take is whether people like me...(are) entitled to get our LPG subsidy," Jaitley said at a media event. At present, the government provides 12 subsidised cylinders a year to a household, each costing Rs 417 in Delhi, compared with the market price of Rs 865. Liquefied petroleum gas is currently the biggest fuel subsidy item and third-largest overall, after food and urea subsidies. Oil firms lost an estimated Rs 46,458 crore on cooking gas sales in 2013-14.
"I think the sooner we are able to take these decisions as to who is entitled to these subsidies — of course, some people would be — the better it would be for our system. These decisions are all on our agenda," Jaitley added. He hinted that these decisions could come sooner than expected. "Once the political leadership, particularly the man on the top, has decisiveness, the most complicated of decisions will also become simple," he said.

"One does not have to wait for years to decide on coal blocks or what to do with spectrum or natural resources, or with diesel or with gas pricing. The new government has moved quickly.I think that's the agenda we continue to follow," he said.

The finance minister listed some key reforms that the government intends to push. It is "almost ready" with the goods & services tax (GST) and hopes to move a constitutional amendment bill to facilitate it. Amendments are needed to allow states to tax services and the Centre to levy a sales tax and also put in place a structure to administer the levy. GST will replace the plethora of indirect taxes levied by the Centre and states. Jaitley said the government was on the "on the verge" of opening up the insurance sector a little more. The insurance bill proposes to increase the FDI limit in the sector to 49 per cent from the current 26 per cent. The finance minister listed putting in place a friendly tax regime as one of the challenges.

"Unsustainable demand won't get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings... they would have only earned us a bad name as an investment destination,” he said. Mumbai High Court earlier this week struck down claims made in a Rs 18,000-crore transfer pricing case against oil major Royal Dutch Shell.

The case, along with those related to Vodafone, had attracted widespread condemnation and invited charges of 'tax terrorism'. Jaitley listed land acquisition law changes as another tough task before the government. He said that while the direct tax target is likely to be achieved, indirect taxes remain a challenge.