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18% GST applicable on EPC Contract in respect of Power distribution and Transmission to Govt. Entity: AAR

  • | Divita S Gupta

18% GST applicable on EPC Contract in respect of Power distribution and Transmission to Govt. Entity: AAR

The Telangana bench of the Authority of Advance Ruling has held that 18% GST is applicable on EPC contracts in respect of power distribution and transmission to the government entity. The applicant is involved in providing services of Supply, Erection, Testing & Commissioning of 51 Nos. 33/11kV Substations with Associated Lines to the Odisha Power Transmission Corporation Limited. 

In their submission, the applicant has claimed that power distribution and transmission companies are treated as Government entities and the applicable GST rate on supply of services is 12%. The applicant sought an advance ruling on the issue of whether an EPC Contract with regard to power distribution and transmission company falls under the category of “Government Entity” as per the GST notification number 1/2018 Central Tax(Rate) if so the rate of GST applicable.

The AAR held that services rendered to the Odisha Power transmission Corporation Limited falls under services provided to a Government entity and as such a tax rate of 18% is applicable. Additionally, the contractor is not rendering any non-commercial services as the structure arising out of works contract services will be used by the OPTCL for the purpose of commerce.

Even in situations where it seems like the structure is predominantly meant for non-commercial purposes, they actually get reimbursed for their activity on behalf of their customers from the State Government and hence can't be deemed none commercial. 


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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