1. Quick answer
The most important distinction is between electricity itself and the many charges that may appear around electricity. Electricity supply is exempt from GST, but connection, metering, testing, equipment rental, maintenance, facility-management and other ancillary services can have different GST treatment. A reimbursement also does not become non-taxable merely because the invoice calls it a “reimbursement”.
Identify actual supply→Separate electricity from ancillary charges→Test composite supply→Test Rule 33 pure agent→Invoice + ITC + reconciliation
Core control: Never classify the entire utility invoice by its heading alone. Read the contract, identify the supplier and recipient, trace the underlying DISCOM/utility bill, compare the amount recovered, identify any markup or service fee, and then decide the GST treatment.
ElectricityTransmission/distribution of electricity by an electricity transmission or distribution utility is covered by the specified exemption framework.
Ancillary chargesConnection, meter rental, testing and similar charges can be separate taxable services.
RecoveriesActual-cost recovery may qualify for pure-agent exclusion only when the statutory conditions are satisfied.
2. Legal framework
The analysis normally starts with the CGST Act's provisions on supply, composite supply, value of supply, time of supply, input tax credit and tax invoices, read with the exemption notifications and the specific facts of the utility arrangement.
| Source / concept | Why it matters |
|---|---|
| Section 7 | Determines whether the activity is a supply and how the transaction fits within the GST framework. |
| Section 8 | Relevant when multiple supplies form a composite or mixed supply and the principal-supply analysis is required. |
| Section 15 | Controls valuation where a taxable supply exists, including situations involving related persons or additional amounts. |
| Section 16 | Sets the principal conditions for ITC where GST has actually been charged on an eligible inward supply. |
| Section 17 | Contains restrictions and common-credit rules that may affect GST-bearing utility-related services and infrastructure. |
| Rule 33 | Provides the pure-agent mechanism for excluding specified third-party expenditure from the value of a supply when all conditions are met. |
| Notification 12/2017-Central Tax (Rate) | Contains the exemption entry for transmission or distribution of electricity by an electricity transmission or distribution utility, along with other exemption entries. |
| Circular 34/8/2018-GST | Clarifies that certain DISCOM charges such as application/connection, meter rental and testing-related services are distinct from exempt transmission/distribution. |
| Circular 178/10/2022-GST | Clarifies the treatment of fixed/capacity charges and variable electricity charges and explains that fixed electricity charges are not automatically consideration for tolerating non-consumption. |
| Circular 206/18/2023-GST | Addresses electricity reimbursement received by real estate companies, malls, airport operators and similar entities, including bundled electricity and pure-agent actual recovery. |
Important: “Electricity is exempt” is not a blanket exemption for every amount appearing on an electricity bill or every service connected with power. Classification must be performed charge by charge.
3. Electricity vs ancillary charges
For practical review, split the utility transaction into the commodity/service of electricity and everything else around it.
| Charge | Initial review direction | Control point |
|---|---|---|
| Energy/unit charge | Electricity supply | Check the actual supplier and exemption entry. |
| Fixed/capacity charge | Part of electricity pricing where it represents capacity/fixed electricity charge | Do not automatically tax it as tolerating an act; read Circular 178/10/2022-GST. |
| Application/connection fee | Separate utility service | Check GST charged and invoice details. |
| Meter rental | Separate service where charged as such | Do not merge it with exempt electricity merely because it is on the same bill. |
| Meter/transformer testing | Separate service | Review tax component and ITC eligibility. |
| Internal electrical maintenance | Service | Separate vendor invoice and ITC review. |
| Generator operation | Potential service | Separate fuel, equipment rental and operation charges where contractually distinct. |
| Administration/convenience fee | Potential taxable service | Markup or fee is not automatically a pure-agent reimbursement. |
4. Electricity reimbursements & pure-agent treatment
Rule 33 can exclude specified amounts from the value of a supplier's taxable supply where the supplier acts as a pure agent and the prescribed conditions are satisfied. For electricity recoveries, the practical evidence is especially important.
Pure-agent control test
Contract clearly identifies the supplier's role in procuring the third-party utility.
The recipient is the person who actually uses/benefits from the third-party utility.
The third-party amount is separately indicated in the invoice.
The supplier does not use the procured service for its own interest beyond the agency arrangement.
The actual third-party amount is recovered without an embedded markup.
The underlying DISCOM/utility bill and recovery calculation are retained.
Circular 206/18/2023-GST: where electricity is supplied bundled with renting of immovable property and/or maintenance, it can form part of a composite supply with the principal supply. The same circular also explains the pure-agent route for electricity supplied on actual basis in the stated circumstances.
What weakens the pure-agent position?
- Recovery exceeds the actual utility amount without a clearly separate and independently analysed charge.
- The supplier consumes the service for its own account as part of its own service before recovering it.
- The contract makes electricity part of the supplier's own bundled service consideration.
- There is no reliable third-party bill or consumption/recovery trail.
- The supplier labels a markup or administration fee as “reimbursement”.
5. Composite supply: electricity bundled with rent or maintenance
Circular 206/18/2023-GST specifically addresses electricity recovered by real estate companies, malls, airport operators and similar entities. Where electricity is supplied bundled with renting of immovable property and/or maintenance, it may form part of a composite supply and the principal supply determines the treatment.
Lease / maintenance arrangement→Electricity supplied as ancillary component→Identify principal supply→Apply principal-supply rate/treatment
Separate billing is not decisive. Showing “electricity reimbursement” on a separate line does not by itself prove that the amount is outside the value of the principal taxable supply.
Questions to ask
- Who is contractually supplying the premises/rental/maintenance?
- Who is the electricity supplier?
- Who receives the DISCOM bill?
- Is the exact third-party amount recovered?
- Is any markup or convenience fee charged?
- Is electricity essential/ancillary to the principal service?
- Does Rule 33 actually apply?
- Do the invoice and books reflect the conclusion?
6. Utility charge-by-charge map
Transmission / distributionSpecified electricity transmission/distribution by an electricity transmission or distribution utility falls within the exemption framework.
Connection / applicationDo not assume the exemption covers application or connection services.
Meter rentalReview as a distinct charge where separately supplied.
TestingTesting of meters, transformers or capacitors can be distinct from electricity transmission/distribution.
MaintenanceElectrical maintenance is a service and normally needs its own GST/ITC analysis.
Capacity chargeFixed electricity/capacity pricing is not automatically a tolerating-act service.
Late chargeUse the actual contractual nature and Circular 178/10/2022-GST principles rather than blanket classification.
Generator serviceSeparate electricity/fuel from equipment and operating services.
Administration feeA separate fee can be taxable even when the underlying electricity is exempt.
7. Business situations that require special care
| Situation | Primary GST question | Evidence |
|---|---|---|
| Factory / warehouse | Is the charge electricity, utility service or facility service? | Lease/service agreement, utility bill, meter statement. |
| Construction site | Is power supplied by owner, contractor, DISCOM or DG operator? | Site agreement, DG log, invoices, meter readings. |
| Mining project | Is electricity an input to the main contract or a separate recovery? | Contract BOQ, recovery clause, source bill. |
| Hotel | Is power part of the principal hospitality/facility supply? | Tariff/contract, customer invoice, cost records. |
| Mall / commercial building | Pure agent or composite rental/maintenance? | Lease, CAM agreement, DISCOM invoice, recovery schedule. |
| RWA | Actual electricity recovery and exemption/pure-agent conditions? | Utility bill, member allocation, recovery statement. |
| Group companies | Same registration or distinct persons? | GSTIN map, inter-company agreement, allocation working. |
| SEZ / industrial park | What exactly is being supplied and by whom? | Agreement, utility invoice, SEZ documentation. |
8. ITC treatment
Electricity itself does not normally generate a GST input tax component when the electricity supply is exempt. The practical ITC question arises on GST-bearing ancillary services and infrastructure.
No GST on electricityNo GST component means there is no GST amount on that electricity supply to claim as ITC.
Taxable meter serviceWhere GST is legally charged on a separate eligible service, review Section 16 conditions before claiming.
Electrical maintenanceReview eligibility, business use and Section 17 restrictions where applicable.
Transformer AMCMaintain invoice-level ITC evidence and map the service period.
InfrastructureElectrical infrastructure may trigger works-contract/immovable-property restrictions; classify the underlying supply before claiming.
Common useIf GST-bearing services support taxable and exempt activities, apply the relevant common-credit rules.
Do not claim tax merely because a landlord or vendor has charged GST. First establish whether the supplier was legally required to charge GST and whether the recipient satisfies the ITC conditions.
9. Accounting & documentation
Recommended ledger structure
| Ledger | Purpose |
|---|---|
| Electricity consumption | Underlying exempt electricity cost / utility expense. |
| Electricity reimbursement recovery | Separate recovery ledger where genuine third-party reimbursement is used. |
| Meter / connection service | Separate GST-bearing ancillary charges. |
| Electrical maintenance | Service expense with separate ITC review. |
| Generator fuel | Fuel cost tracked separately from generator service. |
| Utility administration fee | Separate taxable service where applicable. |
Monthly evidence pack
Contract / lease / CAM agreement
Original DISCOM or utility bill
Meter reading / consumption report
Recovery calculation
Supplier tax invoice
Payment proof
Accounting entry
GSTR-1 / 3B impact
GSTR-2B impact for GST-bearing purchases
Reviewer sign-off
10. GSTR-1, GSTR-3B and GSTR-2B treatment
For a supplier recovering electricity
- Determine whether the recovery is outside the taxable value, part of a composite supply, or a separate taxable service.
- If taxable, issue the correct tax document and report the supply in the appropriate return tables.
- Reconcile output tax reported in GSTR-1 with GSTR-3B.
- Maintain a contract-to-invoice bridge for unusual recovery arrangements.
For a recipient
- Do not claim ITC on an exempt electricity component.
- For GST-bearing ancillary services, match invoice details with GSTR-2B and source documents.
- Check supplier reporting, invoice eligibility and Section 16 conditions.
- Where the vendor has charged GST incorrectly, obtain clarification before treating it as eligible credit.
Books→Utility source→Invoice→GSTR-1 / 2B→GSTR-3B→ITC decision
11. Electricity GST reconciliation workflow
Utility reconciliation should not be a simple “invoice matched / invoice unmatched” exercise. The tax team should reconcile the commercial substance of the charge.
| Stage | What to compare | Exception examples |
|---|---|---|
| 1. Contract | Who bears electricity cost and who supplies it? | Agreement silent / amended clause. |
| 2. Utility source | DISCOM/utility bill and account holder | Wrong GSTIN / missing bill. |
| 3. Consumption | Meter reading and period | Reading mismatch / estimated bill. |
| 4. Recovery | Actual third-party amount vs amount charged | Markup / under-recovery / rounding. |
| 5. Tax document | Tax invoice and GST amount | GST charged on exempt electricity. |
| 6. Portal | GSTR-1 / 2B / 3B | Missing invoice / duplicate / value mismatch. |
| 7. ITC | Eligibility and restrictions | Wrong GST / blocked credit / common credit. |
| 8. Review | Legal position and evidence | Pure-agent evidence incomplete. |
For invoice-level review, the GST Reconciliation Tool can be used for Purchase Register and GSTR-2B comparison, while the electricity-specific tax position should remain documented separately.
12. Decision matrix
| Fact pattern | Initial direction | What can change the result? |
|---|---|---|
| Pure electricity from DISCOM | Exempt electricity framework | Separate ancillary charges on the bill. |
| Actual utility reimbursement by landlord | Test Rule 33 and Circular 206/18/2023-GST | Markup, bundling, contract and actual-use conditions. |
| Electricity bundled with rent/maintenance | Composite-supply analysis | Nature of principal supply and contract. |
| Electricity plus administration fee | Analyse fee separately | Whether fee is truly part of the exempt electricity supply or consideration for another service. |
| Meter rental/testing | Separate service analysis | Actual invoice and supplier activity. |
| Electrical AMC | Taxable-service/ITC analysis | Supplier classification, place of supply and eligibility. |
| Generator electricity recovery | Separate fuel/equipment/service analysis | Contract structure and actual supply. |
| Group-company recovery | Distinct-person/valuation analysis | GST registration structure and relationship. |
13. Practical scenario library
This library contains 136 practical scenarios covering factories, warehouses, malls, hotels, construction sites, mining projects, generators, group companies, RWA, SEZ, industrial parks, leases, maintenance contracts, utility vendors, ITC and reconciliation.
| # | Situation | Facts | Review direction |
|---|---|---|---|
| 1 | DISCOM electricity supply | Electricity supplied by a State DISCOM to a registered factory | Electricity supply itself is outside GST/exempt from GST; do not treat the DISCOM bill as a normal taxable inward service invoice. |
| 2 | Electricity duty | State electricity duty appears separately on the electricity bill | Keep electricity duty separate from GST analysis; it is not GST merely because it appears on the utility bill. |
| 3 | Landlord recovers actual electricity | Landlord recovers exactly the amount charged by DISCOM | Check the pure-agent conditions and Circular 206/18/2023-GST before excluding the recovery from taxable value. |
| 4 | Landlord adds a markup | Landlord bills electricity at DISCOM cost plus a 5% recovery fee | The markup requires separate analysis; pure-agent treatment cannot automatically cover an amount beyond the actual third-party charge. |
| 5 | Electricity bundled with rent | Commercial lease includes electricity as part of the premises arrangement | Where electricity is bundled with renting of immovable property, analyse composite-supply treatment and the principal supply under Circular 206/18/2023-GST. |
| 6 | Electricity billed separately with rent | Lease and electricity are shown on separate lines by the same landlord | Separate presentation does not by itself decide the GST treatment where the supplies are naturally bundled. |
| 7 | CAM plus electricity | Mall operator charges common-area maintenance and electricity | Analyse whether electricity is ancillary to the principal maintenance/renting supply and apply the composite-supply framework where applicable. |
| 8 | Sub-meter recovery | Tenant has a sub-meter but the main DISCOM connection is in landlord name | Compare actual third-party charge, contractual terms, meter basis and any markup before deciding the GST treatment. |
| 9 | Fixed electricity recovery | Tenant pays a fixed monthly utility amount | A fixed amount is not automatically an electricity-only reimbursement; identify whether it is consideration for a broader taxable facility/service. |
| 10 | Power-factor penalty | DISCOM bill contains power-factor related charge | Review the character of the charge under the electricity arrangement; do not automatically classify it as a taxable tolerating-act service. |
| 11 | Demand/capacity charge | Customer pays minimum demand/capacity charges even when consumption is low | CBIC Circular 178/10/2022-GST explains that fixed/capacity and variable electricity charges are components of the electricity supply and are not taxable merely because consumption is below the contracted level. |
| 12 | Meter rent | DISCOM separately charges rental for metering equipment | Circular 34/8/2018-GST identifies meter rental and several connection-related charges as services distinct from exempt transmission/distribution; classify the actual charge accordingly. |
| 13 | New connection fee | DISCOM charges an application/connection fee | Do not assume exemption simply because it is on an electricity bill; connection-related services require separate classification. |
| 14 | Meter testing | DISCOM charges testing fees | Analyse as a separate utility service where applicable rather than treating every line item as the exempt electricity supply. |
| 15 | Shifting meter | Customer pays for shifting of meter/service line | Treat the charge according to its own service character; the fact that the supplier is a DISCOM does not make every ancillary charge electricity supply. |
| 16 | Transformer testing | Utility charges testing of transformer/capacitor | Review the charge as an ancillary utility service and determine GST treatment separately. |
| 17 | Generator diesel recovery | Landlord recovers actual diesel consumed by a backup generator | Separate the diesel/fuel element from generator operation or facility-management services and document the contractual basis. |
| 18 | Generator electricity with service fee | Facility manager charges electricity plus a generator operation fee | The service fee is not automatically exempt merely because electricity is also billed. |
| 19 | Factory captive power | Company generates electricity for its own factory | Own consumption is not the same as a taxable outward supply to another person; analyse any onward supply separately. |
| 20 | Captive power to group company | One group company supplies electricity to another entity | Consider supply, consideration, related-person/distinct-person rules and valuation where the entities are separately registered. |
| 21 | Common GST registration | Multiple business units use one electricity connection under the same GST registration | Allocation may be an accounting/control issue rather than a distinct-person supply; document the commercial and registration structure. |
| 22 | Distinct GST registrations | Two GST registrations of the same legal entity share one electricity connection | Consider distinct-person treatment and valuation where there is a supply between registrations, especially for recoveries and common services. |
| 23 | Head office recovery | Head office pays the electricity bill and recovers cost from a branch | Map the GST registrations and determine whether the recovery represents an internal allocation or a supply between distinct persons. |
| 24 | Industrial park recovery | Industrial park operator recovers power from occupants | Check the utility contract, DISCOM invoice, actual recovery, markup and whether power is bundled with taxable facility/rental services. |
| 25 | SEZ electricity | SEZ unit receives electricity through a developer/operator | Analyse the actual supplier, recipient, authorized-operations context and documentation; do not infer GST treatment solely from SEZ status. |
| 26 | Warehouse electricity | Warehouse operator recovers power from a customer | Determine whether it is actual utility reimbursement or part of warehousing/rental/facility service consideration. |
| 27 | Hotel electricity | Hotel includes electricity within room/facility charges | Electricity may be an ancillary component of the principal taxable hospitality supply; it is not appropriate to carve out an internal electricity cost automatically. |
| 28 | Residential complex common electricity | RWA recovers actual electricity from members | Circular 206/18/2023-GST is directly relevant to pure-agent/actual-recovery analysis; separately consider the RWA's own taxable supplies and applicable exemptions. |
| 29 | Commercial building common electricity | Building owner recovers common-area electricity from tenants | Analyse whether the recovery is ancillary to renting/maintenance and whether pure-agent conditions are actually met. |
| 30 | Actual recovery with invoice copy | Landlord attaches DISCOM bill and recovers exact amount | Strong evidence for actual-cost analysis, but the other pure-agent conditions still need review. |
| 31 | Actual recovery without supporting bill | Landlord recovers exact amount but cannot produce the underlying utility bill | Documentation risk increases; do not rely only on the words 'reimbursement' or 'actuals'. |
| 32 | Markup described as admin fee | Landlord recovers electricity plus an administration fee | The administration fee is a separate consideration and needs its own GST analysis. |
| 33 | Utility deposit | Tenant pays refundable electricity/security deposit | A genuine refundable deposit generally requires different treatment from consideration; review whether it is actually refundable and whether any adjustment occurs. |
| 34 | Connection deposit adjusted later | Utility deposit is adjusted against final charges | Track the adjustment and assess the point at which it becomes consideration. |
| 35 | Advance electricity payment | Customer pays an advance against future consumption | Determine the legal nature of the payment and applicable time-of-supply rules for the actual supply involved. |
| 36 | Electricity included in maintenance contract | Facility management agreement includes electricity and housekeeping | Identify the principal supply and whether electricity is ancillary under composite-supply principles. |
| 37 | Separate electricity vendor | Customer pays DISCOM directly while facility manager charges maintenance | This generally creates a cleaner separation, but the contract should reflect the actual commercial arrangement. |
| 38 | Electricity plus rent to related company | Parent company owns premises and recovers rent plus electricity from subsidiary | Analyse related-person valuation, composite supply and pure-agent conditions rather than relying on cost reimbursement terminology. |
| 39 | Electricity plus GST on entire rent | Landlord charges GST on rent and separately labels electricity reimbursement | Check Circular 206/18/2023-GST and the contractual arrangement before deciding whether the electricity line can be excluded. |
| 40 | Electricity reimbursement through vendor | Facility manager receives DISCOM bill and recovers it from client | Check whether the facility manager is acting as principal supplier or pure agent and whether contractual and documentary conditions support the position. |
| 41 | Pure-agent contract | Contract expressly says supplier acts as pure agent | Contract wording helps but does not by itself satisfy Rule 33; all statutory conditions should be tested. |
| 42 | Pure-agent ownership issue | Utility connection remains in landlord's name | Ownership/name on the account is relevant but not determinative; examine who is contractually liable, who receives supply and whether Rule 33 conditions are met. |
| 43 | Pure-agent markup | Supplier calls a 2% handling charge 'reimbursement' | A markup/handling charge can undermine pure-agent exclusion for the amount charged beyond the third-party cost. |
| 44 | Tax invoice for exempt electricity | Business receives an electricity bill with no GST | Do not invent GST or ITC from an exempt/non-taxable electricity charge. |
| 45 | ITC on electricity bill | Company asks whether electricity cost itself creates GST ITC | No GST charged means there is generally no GST component on the electricity supply itself to claim as ITC; assess separately any taxable ancillary services. |
| 46 | ITC on meter service | DISCOM/vendor charges GST on a taxable meter-related service | If otherwise eligible, the GST component may be considered for ITC subject to Section 16 and other restrictions. |
| 47 | Power infrastructure installation | Vendor installs a transformer/substation and charges GST | Installation is not the same as supply of electricity; classify the works/service and assess ITC separately. |
| 48 | Transformer AMC | Vendor provides annual maintenance of transformer | AMC is a service and should be analysed independently from exempt electricity supply. |
| 49 | Electrical repair | Contractor repairs internal electrical systems and charges GST | This is a taxable inward service where applicable; maintain invoice and ITC controls separately from electricity consumption. |
| 50 | Solar EPC | Company purchases solar EPC services | Analyse goods/services and immovable-property/works-contract restrictions separately; do not treat EPC as exempt electricity supply. |
| 51 | Solar generation for own use | Company uses rooftop solar for its own consumption | Separate the generation/installation transaction from any outward supply of electricity. |
| 52 | Open access charges | Business incurs wheeling/open-access related charges | Classify each charge according to the actual supply; transmission/distribution exemption does not automatically extend to every related charge. |
| 53 | Transmission service | Electricity transmission utility charges for transmission | Transmission or distribution by an electricity transmission/distribution utility falls within the specified exemption, subject to the exact legal conditions. |
| 54 | Trading of electricity | Trader buys and sells electricity | Do not confuse trading/supply arrangements with the exemption for transmission or distribution services; analyse the actual supply. |
| 55 | Renewable energy certificate | Company purchases renewable energy certificates | RECs are distinct from electricity consumption and require separate GST classification. |
| 56 | Green power premium | DISCOM/utility charges a green-power premium | Determine what the charge represents contractually before extending electricity exemption to it. |
| 57 | Temporary construction connection | Construction site gets temporary electricity connection | Check whether the bill is for electricity itself or includes taxable connection/testing/rental services. |
| 58 | Construction site generator | Contractor operates DG set and recovers electricity cost | Analyse generator service, fuel recovery and electricity output separately where the contract separates them. |
| 59 | Mining site power recovery | Mining contractor recovers electricity from client | Review contract structure, actual source of power, markup and whether the recovery forms part of the principal contract consideration. |
| 60 | EPC subcontractor electricity | Main contractor provides electricity to subcontractor at site | Determine whether it is a separate supply or an incidental cost within the subcontract/service arrangement. |
| 61 | Free electricity to contractor | Project owner supplies electricity free to contractor | Document whether this is a contractual input/cost arrangement or a separate supply; do not create artificial GST solely from cost allocation. |
| 62 | Material-at-site with power | Project owner supplies power and materials to contractor | Keep electricity analysis separate from free-issue material valuation and the main works contract. |
| 63 | Power consumed by tenant | Tenant pays landlord based on meter units | Metering supports consumption measurement but does not itself prove pure-agent status. |
| 64 | Power consumed by multiple tenants | One main meter serves multiple tenants | Maintain a defensible allocation method and supporting utility invoice trail. |
| 65 | Common-area allocation | Common-area electricity is allocated by carpet area | Allocation method alone does not determine GST; assess the underlying supply and contract. |
| 66 | Fixed CAM plus variable power | CAM fixed fee plus variable electricity recovery | Review whether both form one composite facility/rental supply or whether genuine separate supplies exist. |
| 67 | Electricity reimbursement with maintenance GST | Maintenance is taxable and electricity is separately recovered | Review whether electricity is ancillary to maintenance under Circular 206/18/2023-GST. |
| 68 | Utility bundled in lease deed | Lease deed says electricity is included in rent | Contract language is important evidence of bundling, but actual conduct and invoicing should align. |
| 69 | Utility billed by separate group company | Group company owns the utility meter and charges another entity | Analyse whether the charging entity is acting as principal supplier, pure agent, or provider of a composite service. |
| 70 | Electricity purchased from renewable generator | Business buys power through a PPA/open-access structure | Identify whether the transaction is electricity supply, transmission/wheeling or another taxable service and document each component. |
| 71 | PPA fixed charge | PPA has fixed and variable charges | CBIC Circular 178/10/2022-GST is relevant to fixed/capacity and variable electricity components; assess any genuinely separate services independently. |
| 72 | Late payment surcharge | Electricity bill contains late-payment surcharge | Circular 178/10/2022-GST explains treatment of ancillary charges naturally bundled with the principal supply; distinguish this from unrelated penalties/fines. |
| 73 | Cheque dishonour fee | Utility provider charges cheque dishonour fee | Do not automatically apply the electricity exemption to a distinct bank/administrative penalty; classify the actual charge. |
| 74 | Connection restoration | Utility charges restoration/reconnection fee | Analyse as a separate connection-related service where applicable. |
| 75 | Security service plus electricity | Facility operator supplies security and recovers electricity | Separate taxable security/facility service from utility recovery and test composite-supply principles. |
| 76 | Housekeeping plus electricity | Facility operator provides housekeeping and power recovery | Identify the principal supply and whether electricity is ancillary to the facility service. |
| 77 | Co-working electricity | Co-working operator charges membership/desk fee including power | Electricity may be an ancillary component of the principal co-working/facility service; do not assume an exempt carve-out. |
| 78 | Data centre power | Data centre charges customers for power consumed | Examine whether power is merely part of a taxable hosting/cooling/data-centre service or a separately supplied utility. |
| 79 | Cold storage electricity | Cold-storage operator recovers electricity separately | Review the principal cold-storage service and contract; separate billing does not automatically create a standalone exempt electricity supply. |
| 80 | Hospital facility electricity | Hospital facility includes power in service charges | Electricity cost embedded in an overall taxable/exempt healthcare arrangement requires analysis of the principal supply and applicable exemption. |
| 81 | Mall anchor tenant | Mall recovers tenant's metered electricity | Apply actual recovery/pure-agent and composite-supply tests with the lease/maintenance agreement. |
| 82 | Airport occupant | Airport operator recovers power from concessionaire | Circular 206/18/2023-GST specifically addresses real estate/airport-type reimbursement issues; test actual contractual structure. |
| 83 | Factory utility pool | Parent company centrally procures electricity for several units | Map each GST registration, supply chain and allocation methodology before determining tax treatment. |
| 84 | Inter-unit cost allocation | No markup but cost is allocated by consumption | No-markup alone does not settle distinct-person or composite-supply questions. |
| 85 | Inter-unit cost allocation with markup | Shared-service centre allocates electricity plus 3% overhead | Analyse the overhead/markup separately and consider valuation for related/distinct persons. |
| 86 | Accounting entry only | Company allocates electricity cost internally within same registration | A book allocation is not automatically an outward taxable supply; verify whether there are separate registered persons. |
| 87 | Wrong GST charged by landlord | Landlord charges GST on a line labelled electricity reimbursement | Request the contractual basis and supporting bill; reconcile the tax invoice before claiming ITC. |
| 88 | Wrong ITC claimed | Recipient claims ITC on GST charged against a pure electricity reimbursement | Verify whether GST was legally chargeable before treating it as eligible ITC. |
| 89 | Vendor fails to report taxable ancillary service | Taxable meter/maintenance service is missing from GSTR-2B | Use the normal supplier follow-up and reconciliation controls; do not manufacture portal data. |
| 90 | Duplicate utility invoice | Same utility recovery appears twice in purchase register | Check duplicate invoice number, period, meter reading and payment evidence before claiming ITC. |
| 91 | Period mismatch | Utility service relates to one month but booked in another | Maintain service-period mapping and reconcile accounting period with invoice/reporting period. |
| 92 | Credit note for utility recovery | Landlord issues credit note after correcting meter reading | Reconcile the credit note to the original recovery and assess ITC/tax adjustment implications. |
| 93 | Debit note for under-recovery | Landlord issues debit note for excess consumption | Map the debit note to the original supply and validate tax treatment. |
| 94 | Electricity bill in wrong GSTIN | Utility account belongs to another GST registration | Correct the documentation/registration trail before relying on the invoice for ITC or expense allocation. |
| 95 | Utility charge in exempt business | Business uses electricity for exempt outward supplies | Electricity itself may not contain GST, but GST-bearing ancillary services can still trigger ITC eligibility/reversal analysis. |
| 96 | Mixed taxable and exempt use | Power infrastructure supports taxable and exempt activities | Analyse ITC on GST-bearing infrastructure/services under the applicable common-credit rules. |
| 97 | Common transformer ITC | Transformer maintenance serves taxable and exempt units | Track the GST-bearing service and apply the appropriate ITC allocation/reversal rules where required. |
| 98 | Pure agent documentation file | Company wants an audit file for utility reimbursements | Keep contract, third-party bill, exact recovery calculation, accounting entry, invoice and payment trail together. |
| 99 | Vendor agreement silent | Agreement does not say who bears electricity cost | Resolve the commercial/legal position from actual conduct and supporting records before taking a tax position. |
| 100 | Utility recovery labelled 'reimbursement' | Invoice uses only the word reimbursement | The label is not decisive; substance, contractual terms, actual amount and Rule 33 conditions matter. |
| 101 | GST audit query | Officer asks why GST was not charged on electricity recovery | Provide the exemption/composite/pure-agent legal basis and the underlying contract and utility evidence. |
| 102 | Internal tax review | Finance wants monthly electricity GST controls | Create separate buckets for exempt electricity, taxable ancillary charges, composite-supply recoveries and pure-agent recoveries. |
| 103 | Month-end close | Electricity bill arrives after books close | Accrue expense based on accounting policy, then reconcile the final bill and separately track any GST-bearing ancillary component. |
| 104 | Year-end true-up | Landlord reconciles annual utility actuals | Reconcile provisional recoveries to actual third-party bills and issue/receive appropriate commercial/tax documents. |
| 105 | Budget estimate recovery | Tenant is charged estimated monthly power and annual true-up | Determine whether the monthly amount is consideration for a taxable bundled service or a genuine utility advance/recovery. |
| 106 | Power theft/loss recovery | Tenant is charged for excess loss or unauthorized consumption | Do not automatically call every recovery electricity supply; identify whether it is compensation, penalty or another service/charge. |
| 107 | Minimum guaranteed consumption | Contractor pays minimum power amount regardless of use | Analyse the contract and the nature of the fixed amount using the principles in Circular 178/10/2022-GST. |
| 108 | Electricity plus equipment rental | Utility provider also rents a transformer/meter | Separate electricity supply from equipment rental where they are distinct supplies. |
| 109 | Power quality service | Vendor charges for power-quality monitoring | This is a service distinct from electricity consumption and should be analysed independently. |
| 110 | Energy management service | Consultant charges for monitoring and reducing electricity use | Taxability follows the consulting/service supply; electricity exemption does not extend to unrelated consultancy. |
| 111 | Energy audit | External consultant conducts energy audit | Analyse as professional/consulting service with normal GST and ITC controls. |
| 112 | Facility management bundled power | Single FM invoice includes manpower, security, housekeeping and electricity | Determine the principal supply and composite-supply treatment from the actual contract and commercial structure. |
| 113 | Separate utility invoice by FM contractor | FM contractor issues a distinct electricity line | Separate invoicing does not alone determine whether it is a separate supply; apply the substantive tests. |
| 114 | Utility reimbursement to government office | Contractor recovers government electricity charge at actuals | Review whether Rule 33 can apply and whether the charge is incurred as pure agent or forms part of the contractor's own supply. |
| 115 | Municipal utility charges | Municipality-related electricity/common utility charge is recovered | Identify the actual supplier and nature of charge; government involvement alone does not determine GST treatment. |
| 116 | Residential rent with electricity | Residential landlord separately recovers electricity from tenant | Review residential-rental exemption and the electricity recovery structure separately; do not apply commercial-rental rules automatically. |
| 117 | Staff accommodation electricity | Employer recovers electricity from employee accommodation | Employee-recovery and employment-related rules may apply depending on the arrangement; distinguish from third-party tenant arrangements. |
| 118 | Employee housing through landlord | Company pays landlord and recovers actual power from employee | Document whether the company is acting as principal, agent or employer-provided accommodation provider and analyse each supply. |
| 119 | Utility advance to landlord | Tenant pays refundable utility advance | Track the advance separately from final consideration and reconcile the settlement. |
| 120 | Refund after over-recovery | Landlord refunds excess electricity recovery | Match refund/credit to the original transaction and preserve the calculation trail. |
| 121 | No-GST bill plus taxable services | One supplier bill contains exempt electricity and taxable maintenance | Split the components in accounting and reconciliation so GST is not claimed on the exempt component. |
| 122 | Purchase register mapping | Electricity invoice has no GST but taxable meter service is included | Map taxable components separately for ITC and GSTR-2B reconciliation. |
| 123 | GSTR-2B review | Finance sees a utility vendor GST invoice in GSTR-2B | Match invoice number/date/value/tax and determine whether the underlying service is eligible before claiming credit. |
| 124 | GSTR-1 output review | Landlord reports GST on electricity recovery | Compare the reported tax with the lease/maintenance contract and utility evidence before accepting the tax position. |
| 125 | Audit trail | Reviewer needs to understand why a recovery was excluded | Maintain a one-page tax-position memo with legal basis, calculation, contract and source bill. |
| 126 | Contract amendment | Lease changes from actual utility recovery to fixed bundled charge | Reassess the GST treatment from the effective date because the commercial arrangement has changed. |
| 127 | Vendor change | Electricity collection shifts from landlord to facility manager | Re-map the supply chain and invoice flow; prior-period treatment should not be copied blindly. |
| 128 | Shared meter reconciliation | Meter reading differs from DISCOM bill | Investigate timing, loss, common-area allocation or estimation before finalizing the recovery. |
| 129 | Consumption rounding | Recovery differs by small rounding amount | Document the rounding methodology; small differences should not be silently treated as markup. |
| 130 | Taxable convenience fee | Landlord adds a utility convenience fee | Analyse the fee separately; calling it a reimbursement does not convert a separate fee into exempt electricity. |
| 131 | Utility administration service | Vendor charges monthly utility administration fee | Treat the administration service separately from the underlying electricity cost. |
| 132 | Electricity procurement management | Consultant manages power procurement for a client | The management service is distinct from the electricity commodity and needs separate classification. |
| 133 | Power trading platform fee | Platform charges transaction/settlement fee on electricity trades | Analyse the platform/settlement service separately from electricity itself. |
| 134 | Electricity export | Power generator exports electricity | GST treatment and refund/documentation for exported electricity require separate analysis; CBIC has issued specific refund guidance. |
| 135 | Refund of accumulated ITC | Power generator seeks refund related to export of electricity | Follow the applicable refund rules and electricity-specific procedural requirements; retain supporting generation/export data. |
| 136 | Final reconciliation | Tax team closes the utility cycle | Reconcile contract → utility bill → recovery calculation → invoice → books → GSTR-1/3B → GSTR-2B → ITC decision. |
14. Audit checklist
Contract review
Identify electricity supplier
Identify contractual recipient
Check lease/CAM/FM clauses
Check markup/recovery clause
Check amendment dates
Map GST registrations
Invoice review
Check electricity vs ancillary components
Check GST rate and amount
Check invoice period
Check meter/consumption basis
Check credit/debit notes
Check duplicate invoices
Pure-agent review
Third-party bill available
Exact recovery verified
Separate disclosure
No hidden markup
Contract supports agency
Accounting trail agrees
Return & ITC review
GSTR-1 vs books
GSTR-3B vs GSTR-1
Purchase Register vs GSTR-2B
ITC only on GST-bearing eligible services
Common-credit review where required
Exception log retained
15. Frequently asked questions
Is electricity taxable under GST?
Electricity itself is covered by the applicable exemption framework. However, related charges such as connection, meter rental, testing and other services may have separate treatment.
Can a landlord recover electricity without GST?
It depends on the structure. Actual third-party recovery may qualify for pure-agent treatment when Rule 33 conditions are satisfied; where electricity is bundled with renting or maintenance, composite-supply principles under Circular 206/18/2023-GST may apply.
If the landlord charges a markup, is the entire amount automatically exempt?
No. The markup must be analysed separately, and a pure-agent exclusion cannot simply be assumed for amounts beyond the qualifying third-party expenditure.
Are fixed electricity charges taxable as a penalty for not consuming power?
Not automatically. Circular 178/10/2022-GST explains that fixed/capacity and variable electricity charges can form part of the electricity pricing structure.
Can ITC be claimed on an electricity bill?
If the bill represents exempt electricity with no GST, there is no GST component to claim as ITC. GST-bearing ancillary services should be assessed separately for eligibility.
Does separate billing prove that electricity is a separate exempt supply?
No. Separate billing is only one fact. Composite-supply and pure-agent analysis depends on the actual contract, commercial arrangement and statutory conditions.
What should a finance team keep for an electricity reimbursement?
Keep the contract, underlying utility bill, meter/consumption basis, recovery calculation, invoice, accounting entry, payment evidence and the documented GST position.
What is the most common mistake?
Calling an amount a “reimbursement” and assuming that the label determines GST. The substance of the transaction and the applicable statutory conditions determine the treatment.
Related GST resources
Use the internal GST library for connected topics on ITC, reconciliation, blocked credit, GSTR-2B and practical compliance.
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