Electricity charges reimbursement from lessee

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Punitha (Querist)
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18 March 2025 We are collecting EB Charges based on sub meters installed in the lessee's location. The charges are distributed evenly based on the rates raised by EB department. Can we raise Invoice for reimbursement. If so, Please provide HSN Code. Should GST applied if Invoice is raised. If cannot be raised, How do we collect from lessee. Please provide your valuable advice.

Dayal

Dayal (Expert)
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19 March 2025 You need to specify whether it is in relation to commercial property or Residential dwelling.

For reimbursement of electricity charges as a part of lease, it can be said that the reimbursement is in the nature of pure agent and no tax will be payable. This will be in both the cases where reimbursement is based on separate meter installed or expense is shared based on floor area. However, the said stand can be taken in case there is no markup to the actual electricity charges.

The agreement shall specifically have the clause of such reimbursement on actual basis

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