India's tax system exempts electricity supplied as a stand-alone product from GST. The key features are:
Electricity is covered by HSN Code 2716 and is exempt from GST, according to Notification No. 02/2017–Central Tax (Rate), dated June 28, 2017.
When power distribution firms directly supply electricity, all consumers: residential, commercial, and industrial, are excluded.
Additionally exempt from GST are services that are directly related to the distribution of energy, such as the building, installation, or commissioning of electrical infrastructure by distribution utilities.
However, GST becomes applicable when additional services are bundled with electricity supply.
If the bundle includes maintenance services, electrical equipment servicing, or renting of immovable property, it is treated as a composite supply.
Even if electricity is billed individually in these situations, the dominant service classification is applicable, and the bill may be subject to 18% GST.
To find service components that are subject to GST, always review the bill details.
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When I had to pay taxes for the first time, I was confused about is GST applicable on electricity bill? So, I asked my neighbour, a tax advisor, about the same. He said since it is an essential service, the supply of electricity to consumers is excluded from GST. He shared more details with me, including the advantages of including electricity in GST, which I added below.
Does Electricity Bill Have GST?
No. My neighbour informed me that, according to Central Tax Notification 02/2017, energy supplies are not subject to GST. Thermal, solar, hydroelectric, and other electrical energy sources are all covered by this exemption.
Benefits of Including Electricity in GST
He also informed me of the following advantages that result from imposing GST on electricity:
Permits companies to receive input tax credits, and it lowers their production costs.
Increased pricing competitiveness in both domestic and international markets.
Reduces the complexity of the tax structure by combining several state-specific fees.
I hope you found this helpful.
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Is GST Applicable on Electricity Bill?
Samesh72
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2025-04-28T20:23:59+00:00 2025-05-10T12:14:29+00:00Comment
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