Non-tariff charges in electricity bill to attract GST

Financial Express By Sumit Jha July 6, 2018 5:23 AM

Electricity bills can have a goods and services tax (GST) component at times.

On applicability of the GST on refundable security deposit against electricity consumption and electric metre, the AAR said it would be exempt from the GST as it is treated as consideration for supply.

Electricity bills can have a goods and services tax (GST) component at times. Non-tariff charges, which include application fee for releasing connection, rentals charged against metering equipment and labour charges for shifting of meters and service lines, are liable to taxed at 18% under the GST.

The AAR in Rajasthan has ruled that while distribution and transmission of electricity is outside the GST ambit, other associated services would attract the tax. Although the AAR hasn’t specified any GST rate, Rajat Mohan, partner at AMRG & Associates said, services in the GST regime usually attract 18% tax, unless specified otherwise.

The application for advance ruling was filed by Tata Power Ajmer Distribution (TPADL), a subsidiary of Tata Power.

“The other services such as application fee for releasing connection of electricity, rental charges against metering equipment, testing fee for meters/transformers, capacitors, etc, labour charges from customers for shifting of meters or shifting of service lines and charges for duplicate bill provided by distribution companies to consumer are taxable,” the ruling said.

It added that non-tariff charges recovered from customers are not eligible for exemption and TPADL is liable to pay tax on the aforesaid recovery made from their customers. On applicability of the GST on refundable security deposit against electricity consumption and electric metre, the AAR said it would be exempt from the GST as it is treated as consideration for supply. But, if refundable deposit is used as consideration such as forfeiture and offsetting against future progress payment, the deposit becomes taxable.

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