LPG cylinders may get costlier despite temporary relief

Instead of the existing 7.5 percent exemption, a 10 percent VAT will now apply at the production stage until Jun 30, 2027

The government has extended the VAT exemption on liquefied petroleum gas (LPG) cylinders until June 2027, but a VAT hike at the local production level could lead to higher prices, piling pressure on household budgets.

Finance Advisor Salehuddin Ahmed announced the proposal on Monday while unveiling the Tk 7.9 trillion national budget for the 2025–26 fiscal year.

According to the budget proposal, the VAT exemption on LPG cylinders made of iron and steel at the local production level has been adjusted. Instead of the existing 7.5 percent exemption, a 10 percent VAT will now apply until Jun 30, 2027.

The change could drive up cylinder prices.

However, in a separate move, the Bangladesh Energy Regulatory Commission (BERC) reduced LPG prices, effective from 6:00pm Monday.

In its announcement, the BERC said that the price of LPG has been reduced by Tk 2.30 per kg for June, citing falling international prices.

As a result, the price of the widely used 12-kg LPG cylinder has been lowered by Tk 27.60 to Tk 1,403.

The BERC noted that Saudi Aramco had set the average price of propane and butane at $580.50 per tonne for June, down from $597 in May.

Accordingly, the per-kg retail price of LPG has been adjusted to Tk 116.94 for this month, down from Tk 119.24 in May.