GST on Supply of Electricity

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As we know GST on the Supply of Electricity is confusing to many people. The reason is it is hard to qualify Electricity as a good or service. Also, whether or not a tax is payable in combination with the delivery of power combining with some other service components to clients.

Therefore, in this article, We will read about GST on the supply of Electricity.

Whether supply of electricity is a Good or Service?

As per Section 2(52) CGST Act2017, “goods” implies any moveable property excluding money and securities. Further, it includes crops and other items connecting to or in part ofo the land which then we separate before delivery or under a supply contract.

On the other hand, As Per Section 2(102) of the CGST Act, “Services’ means anything other than goods. Furthermore, it includes activities relating to the use of money or its conversion by cash or by any other mode.

Know About GST

GST is a form of tax levied against goods and services and as per GST law, 2017, any person whose business turnover is above Rs. 40L or above has to go for GST Return Filing.

In simple words, The Goods and Services Tax (GST) is a type of Indirect tax. The CGST and the SGST, which are the central GST and the State GST, respectively blend together to impost GST.

The primary goal of this tax structure is to manage the cascading effects of other indirect taxes. For instance, The GST on the supply of Electricity eliminates other indirect taxes, including service tax, excise duty, VAT, etc.

What is the rate of GST on the Supply of Electricity?

Electrical energy supply is under GST Exemption as per notification number 02/2017–Central Tax, 28.06.2017, Sl. No 104, heading ‘2716 00 00 – Electrical Energy. Similarly, transmission or distribution of electricity by an electricity transmission or distribution utility gets exemption from Goods and Services Tax.

Though, The ability to charge taxes on consumption or sale of electricity is in hands of the State Governments vide Entry 53 of List II of Seventh Schedule of Constitution. Consequently, the supply of electricity is exempted from GST but comes under the state government’s taxation.

In Conclusion, The electricity supplying services comes under taxability by the state government. While electricity is not a service, its taxation under the GST Act will be excluded as the Constitution of India explicitly covers it.

GST on Transport: GST Rates for Transport Sector

Moreover, if you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.

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