Charging your electric vehicle (EV) may become costly soon if a recent ruling in Karnataka on the matter is followed. The ruling imposes 18 percent GST on an electricity distribution company that seeks to set up an EV charging station in the state for electric two and four-wheelers.
The decision comes in response to an appeal made by Mysuru-based Chamundeswari Electricity Supply Corporation. The company sought clarity on whether its EV charging station would incur GST on its operations. Since such a charging station comprises two components – providing electricity for charging as well as providing a service to the end consumer, it was unsure if GST would be applicable on the same.
If the operation is deemed as a supply of goods, no GST would be applicable to the charging station. However, the Karnataka Authority for Advance Rulings (AAR) ruled that since the firm does not produce or supply its own electricity, its EV charging station shall be considered as a service to its consumers, incurring 18 percent GST.
The decision was based on a previous ruling by the Ministry of Power. In 2018, the ministry had directed that since such charging stations were not supplying electricity directly, a practice that requires a specific license, they would fall under the category of service providers.
The AAR decision, however, allows the company to offset the tax through input tax credit (ITC), against the business costs including rentals and maintenance, for which GST is already paid.
If charging stations across India follow suit, the cost of charging electric vehicles at a public charging station may go up. The added cost shall depend on whether the service provider will be able to offset the GST cost or levy it on the end consumer.