You would have to pay the full price of cylinder at the time of refill(near about ~1.1k), later govt. would send the subsidized amount to your bank a/c.
Has the policy changed? I thought that you would get x cylinders for the subsidized amount and once you've exhausted the quota you'll get the cylinders at market rate.
Very simple, gas agencies can not sell cylinders to black market / commercial establishments. A lot of customers complain that they don't get cylinders even after 2 months of booking, what happens is the agency sells that to black market and then re-book another one cylinder. This problem is somewhat tamed by allowing only 12 subsidized cylinders in a year but still a lot of customers fo not need/book even 7/8 per year. In the new system, the agency won't have any profit selling cylinders to black market as they have to pay full price to get them and the subsidy will be deposited directly to customer's account.