Electricity Charges Received By Malls, Airport Operators Etc. From Lessees Bundled With Renting, Forms Composite Supply: CBIC

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that whenever electricity is being supplied bundled with renting of immovable property and/or maintenance of premises it forms a part of the composite supply and shall be taxed accordingly.

The Board has issued the clarification in respect of the recommendations of the GST Council in its 52nd meeting held on October 7, 2023, in New Delhi with reference to the GST levy.

The issue was with respect of the applicability of GST on reimbursement of electricity charges received by real estate companies, malls, airport operators etc. from their lessees/occupants.

The principal supply is renting of immovable property and/or maintenance of the premise, as the case may be, and the supply of electricity is an ancillary supply as the case may be. 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.

However, where the electricity is supplied by the Real Estate Owners, Resident Welfare Associations (RWAs), Real Estate Developers etc., as a pure agent, it will not form part of the value of their supply. When 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 a pure agent for this supply.

Circular No. 206/18/2023-GST

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