Quick Summary
Introduction A recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC) has brought significant clarity to the issue of Goods and Services Tax (GST) on electricity charges for tenants, especially in commercial properties. The circular addresses the GST implications when el
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FAQ :
The circular clarifies the Goods and Services Tax (GST) applicability on electricity charges for tenants, particularly in commercial properties, distinguishing between bundled and separately billed electricity.
Electricity supply is considered a composite supply when it's bundled with renting immovable property and/or maintenance of premises. In such cases, it's taxed at the rate of the principal supply.
No, residents in housing societies are exempted from GST on their electricity charges.
If real estate owners, RWAs, or developers charge for electricity based on actual usage at rates similar to state electricity boards, they are deemed to be acting as pure agents, and the electricity charges won't be included in their taxable supply value.
Landlords may need to factor in GST costs for electricity when setting lease rental amounts, which could potentially lead to adjustments in rental expenses for commercial tenants.
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