The Indirect Tax Department stated that electricity meters will attract goods and service tax (GST). This was also confirmed by the Central Board of Excise and Customs (CBEC). Electricity does not come under GST but the rent on electricity meter is not exempted from GST.
The industry, however, seems on the other side of the line on this. PwC India will in all likelihood appeal for exemption of these additional charges from the consumer bills. Pratik Jain, partner PwC, said, “Industry view is that it should not be taxable and should be treated as an incidental to transmission and distribution of electricity”. The circular by CBEC throws light on specific important aspects. Value is not the single and only yardstick to determine the dominant nature of supply (goods or service).
Read Also: What If Electricity Comes Under Goods and Services Tax India?
In addition to electric meters, following services will attract GST:
- Releasing existing connections of electricity.
- Testing Charge for transformers, meters, capacitors.
- Labour Fees for shifting meters or shifting service lines.
CBEC in its circular further clarifies that retreading of tyres is considered only as a service. The GST levied on this service would be 28%. The Rubber used for retreading comes with additional supplies and hence the process of retreading is a supply of service. However, both goods and service would be levied in case of Bus Body Building.
The circular clearly affirms that it is the principal supply that determines the classification as goods or services. Classification may vary as per facts and circumstances.
