GST on Electricity: Is It Covered Under GST?
Electricity powers our homes, businesses, and industries. But when it comes to taxes, many people are confused about whether electricity is taxed under GST. In this blog, we’ll break down what the law says about the gst on electricity, how it applies, and where it doesn’t.
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Is Electricity Covered Under GST?
The short answer is: No, electricity supply is not covered under GST.
- Electricity is classified as a basic necessity, and the government has kept it outside the GST regime.
- No GST is charged on your electricity bill from your utility provider.
- Electricity provided by government-authorized distribution companies is exempt from GST.
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What About Electricity-Related Services?
Even though electricity itself is exempt, services related to electricity may attract GST. Here’s how:
- Installation and Maintenance: Electrical wiring, transformer setup, or repair work may be taxed at 18% GST.
- Electricity Connection Charges: Utility companies may charge for new connections or upgrades — these may also attract GST.
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GST on Electronic Items
It’s important not to confuse electricity with electronic items. Products like fans, refrigerators, and inverters are subject to GST.
| Product Type | Approximate GST Rate |
|---|---|
| Household Appliances | 18% |
| Air Conditioners | 28% |
| LED Lights | 12% |
| Inverters & UPS systems | 18% |
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What About the GST on Electricity Bills for Businesses?
- Electricity bills from government-authorized providers remain exempt from GST.
- Private supply, generator power, or DG set rentals may attract GST at applicable rates (usually 18%).
So, while gst on electricity bill doesn’t apply for normal usage, Input Tax Credit can still be claimed on related services if used for business purposes.
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Conclusion
While electricity itself is not taxed under GST, services and products connected to it may be. Whether you’re a household consumer or a business, understanding this difference helps you manage costs and stay compliant.
So, the next time you check your gst on electricity bill, remember — the main electricity charge is exempt, but it’s smart to watch for GST on any extra services or equipment.
Jagdish Prasad is a Chartered Accountant with over 5 years of experience. He helps people and businesses with GST, income tax, and HSN codes. Jagdish makes sure his clients follow all tax rules and save money the right way. He also enjoys writing simple articles to help others understand taxes and stay updated with the latest rules.
Frequently Asked Questions (FAQs)
- Is GST applied on domestic electricity bills?No, residential electricity bills are GST-exempt.
- Do commercial users pay GST on electricity?The electricity supply itself is exempt, but additional service charges (like meter rent or supervision fees) may attract GST.
- What is the electricity GST rate for industrial supply?There is no GST on electricity supply itself, regardless of the consumer. However, associated services may attract GST.
- Does GST for electricity apply to private power generation?Yes, electricity supplied by private entities (e.g., through gensets or solar PPAs) may attract 18% GST as a service.
- Are electronic items related to electricity taxed?Yes. Items like inverters, batteries, and cables are taxed at standard rates, generally 12% or 18%.
