Reetu | Nov 2, 2023 |
GST Rate of 18% applicable on electricity bills of Commercial Property Tenants
The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification that GST Rate of 18% applicable on electricity bills of Commercial property tenants via Circular.
A circular was issued on the application of GST on reimbursement of electricity prices received by real estate businesses, malls, and airport operators from their lessees or tenants.
Tenants, particularly those of commercial properties, will be required to pay 18% GST on electricity charges if the supply is bundled with the renting of immovable property and the maintenance of premises, but power billed on an actual basis by real estate owners or malls acting as discoms’ agents will not be subject to GST, the government clarified.
“It is clarified that whenever electricity is being supplied bundled with renting of immovable property and/or maintenance of premises, as the case may be, it forms a part of composite supply and shall be taxed accordingly,” according to the ruling.
‘The primary source is the rental of immovable property and the upkeep of the premises, whereas the supply of energy is secondary,’ it stated. “Even if electricity is billed separately, the supplies will constitute a composite supply, and therefore, the rate of the principal supply i.e., GST rate on renting of immovable property and/or maintenance of premise, as the case may be, would be applicable,” according to the circular.
It further clarified that inhabitants of housing societies will be excluded from GST. Electricity supplied as a pure agent by real estate owners, resident welfare associations (RWAs), or real estate developers will not be included in the value of their supply. “Further, where they charge for electricity on an actual basis that is, they charge the same amount for electricity from their lessees or occupants as charged by the State Electricity Boards or DISCOMs from them, they will be deemed to be acting as pure agent for this supply,” it added.
For Official Circular Download PDF Given Below:
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