The Authority for Advance Ruling or AAR (Rajasthan) has cleared all pervading ambiguities over GST and Electricity. While Electricity is not under the direct ambit of the GST, but electricity invoices can have GST components at times. These components will be part of the Non-tariff charges. 18% GST is liable by default on Non-Tariff charges. Electricity consumption and Electric meter are free of GST ambit as they are considered as supply.
The clarification from AAR comes against an application filed by Tata Power Ajmer Distribution (TPADL). The AAR ruling also states that refundable security deposits are exempted from GST. However, GST would be levied on refundable security deposits used for payment of penalties or neutralizing future progress payments.
What are Non-tariff Charges?
Non Tariff charges subsume all associate electricity services other than distribution and transmission. As per the AAR ruling, Non-tariff Charges subsume services like:
- The application fee for Discontinuing Electricity Services.
- Rents on electricity meters.
- Testing charges on capacitors, meters/transformers.
- Labour Charges for shifting meters/service lines.
- Charges against the furnishing of duplicate bills.
Recommended: What If Electricity Comes Under Goods and Services Tax India?
All the above services will attract GST. While the AAR did not confirm the applicable GST rates on these services, experts confirmed that services under GST by default attract a tax rate of 18%.
