Tax on the electricity bill

This query is : Resolved

Rens Sebastin Lukose (Querist)
Follow

27 July 2011 Dear Sir

our electricity bill (BESCOM - Bangalore Karnataka) shows 5% tax on electricity charges.
I want to know what is this tax and whether we can avail input credit in the service tax or sales tax for the same.

Thanks in anctipation of your reply

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

26 July 2025 The 5% tax you see on your BESCOM electricity bill is likely the **Electricity Duty** or a **local sales tax** applicable on electricity consumption in Karnataka.

### Key points:

* **Electricity Duty** is a state government tax levied on the supply of electricity.
* It is **not a service tax** and therefore **you cannot claim input credit for service tax** on this amount.
* Similarly, **input VAT or sales tax credit is generally not available on electricity duty** because electricity is usually a separately taxed utility, and such taxes are often not eligible for credit under the VAT laws.
* If your business is registered under GST (post-2017), electricity supply (by a government utility) is generally **outside the scope of GST**, so no input tax credit arises on electricity duty either.

### Summary:

* The 5% tax is a **state-level electricity duty or sales tax**.
* **No input tax credit** is available for this tax under service tax or VAT.
* It is treated as a pass-through cost and part of your electricity expense.

If you want, I can check the specific Karnataka electricity duty rules or latest tax updates for you. Would you like that?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now