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Home News Power Sector News Rent on electricity meter comes under GST, move may draw criticism

Rent on electricity meter comes under GST, move may draw criticism

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GSTIndirect tax department has clarified that rent on electricity meter draws goods and service tax (GST), a development which is likely to draw criticism from the industry. The Central Board of Excise and Customs (CBEC) said even though electricity is exempted from GST, rent on electricity meter is not.

Pratik Jain, partner PwC, said there was a contrary circular under the service tax laws. “Industry is likely to pitch in for an exemption on these ancillary charges else consumers will have to bear the additional burden,” he said.

He said industry view is that it should not be taxable and should be treated as an incidental to transmission and distribution of electricity.
Besides, GST will also be imposed on application fee for releasing connection of electricity; testing fee for meters, transformers, capacitors; labour charges from customers for shifting meters or shifting service lines.

The department also clarifed that retreading of tyres is a service, against the popular notion that it is both goods and services. This service would be taxed at 28 per cent under the GST.

CBEC said the pre-dominant element here is the process of retreading, which is a supply of service. Rubber used for retreading is an ancillary supply and hence this activity is a service.

In the case of bus body building, there is both supply of goods and services. Thus, classification of this as goods or services would depend on which is the principal supply. It may be determined on the basis of facts and circumstances of each case, said CBEC.

“The circular clarifies certain important aspects. It was mentioned that value is not the only determinant to arrive at the dominant nature of supply (goods or service),” Jain said.


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