GST on the Electrical Industry — Goods, Works Contracts & Rates
The electrical industry — wires and cables, switchgear, transformers, motors, appliances, panels and installation services — falls under GST at rates that vary by product and by whether the supply is goods, services, or a works contract. This guide explains how GST applies. (Rates change with periodic rationalisation — confirm the current rate for your HSN/SAC.)
GST on electrical goods
Electrical goods are taxed at the rate for their HSN classification — many electrical items (wires, cables, switchgear, transformers, appliances) fall in the 18% band, while some categories differ. Manufacturers and dealers charge GST on outward supply and claim input tax credit on inputs and capital goods.
Installation & works contracts
Supplying and installing electrical systems (wiring a building, setting up panels) often qualifies as a works contract — a composite supply of goods and services treated as a service under GST, taxed at the applicable works-contract rate. Pure installation/repair labour is a service taxed at the service rate. Classifying goods vs works contract vs pure service correctly is important for the right rate and ITC.
Input Tax Credit
Businesses in the electrical supply chain can claim ITC on GST paid on raw materials, components, input services and capital goods used in business, set off against output GST. Note the ITC restrictions where electrical work is capitalised into immovable property.
Compliance essentials
- Correct HSN (goods) and SAC (services/works contract) and rate.
- E-invoicing / e-way bills where applicable by turnover and movement.
- Careful classification of composite supplies (supply + installation).
Frequently asked questions
What GST rate applies to electrical goods?
It depends on the product’s HSN — many electrical goods are at 18%, though some categories differ. Confirm the current rate.
How is electrical installation taxed?
Supply-and-install work is often a works contract (treated as a service) at the applicable rate; pure labour is a service.
Can I claim ITC on electrical inputs?
Yes, on business inputs and capital goods, subject to restrictions where the work becomes part of immovable property.
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Related guides: GST registration · Input tax credit · GST on manufacturing
