GST applicable on Non-Tariff Charges in Electricity Bill: AAR [Read Order]

Electricity Bill - Taxscan

In an application filed by filed by Tata Power Ajmer Distribution (TPADL), a subsidiary of Tata Power, the Rajasthan Authority for Advance Ruling have recently held that 18 percent Goods and Services Tax (GST) is applicable on the non-tariff charges in the Electricity Bill.

Non-tariff charges, includes the application fee for releasing the connection, rentals charged against metering equipment and labour charges for shifting of meters and service lines, are liable to tax at 18% under the GST, the authority said.

“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.

The authority also observed 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 the issue of 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 the supply. But, if the refundable deposit is used as consideration such as forfeiture and offsetting against future progress payment, the deposit becomes taxable.

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