The Central Board of Indirect Taxes and Customs on Tuesday issued a circular on the applicability of GST on reimbursement of electricity charges received by real estate companies, malls, and airport operators from their lessees or tenants.
Tenants, particularly of commercial properties, will have to pay 18% Goods and Services Tax (GST) on electricity charges if the supply is bundled with renting of immovable property and maintenance of premises, but power billed on an actual basis by real estate owners or malls, acting like an agent of discoms, will not attract any GST, the government clarified.
The Central Board of Indirect Taxes and Customs (CBIC) on Tuesday issued a circular on the applicability of GST on reimbursement of electricity charges received by real estate companies, malls, and airport operators from their lessees or tenants.
“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,” it said.
The principal supply is renting of immovable property and maintenance of premise while the supply of electricity is ancillary,’ it said. “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,” it added.
Read more at : Hindustan Times
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