What is Electricity Duty?
Electricity duty is defined as per the policy of the central government with taxes going to the state government. This differs from state to state. The tax is also different for different sectors and industries.
Electricity Duty is applicable on the usage of electricity and the amount goes to the state government. The amount is applicable as per the central government policy.
Electricity Tariff Policy in India
The electricity tariff policy has been laid down to ensure that electricity is available to consumers at reasonable and competitive rate and to ensure that there is financial viability of the power sector. The policy ensures transparency and promotes competition and efficiency in the operations.
Cross-Subsidies and Their Impact on Electricity Duty
Though the cost of supplying electricity to all the categories of consumers remain the same the tariff charged is different. Domestic consumer may be charged Rs.2.5 per unit whereas industrial consumer may be charged Rs.3.5 per unit for the consumption. Domestic consumers are cross subsidized by the industrial consumers. This happens to be one of the major tool for energy conservation.
Electricity Duty: Tax Implications on Power Consumption
As a substitute to the cross-subsidy, state government uses tax and duty to give subsidy to the needy consumers. Different duty or tax is charged for different consumer categories. With the collection of this duty, government manages the finances for the subsidy that is provided to the needy consumers.
How is Electricity Duty Applied Across States?
The duty is charged on consumption at the applicable rate per unit of electricity consumed. If you electricity consumption is higher, you will be getting a higher electricity duty. Certain states the duty is charged on the total charges. The only way to reduce the duty is to reduce the consumption per month. This ensures that efficient energy conservation measures are taken.
Details of electricity duty or tax is as follows as per the Tariff Orders issued by various State Power Utilities:
State | Domestic | Commercial | Agriculture | LT Industry | HT industry | Railway |
Andhra Pradesh | 6 P/KWh | 6 P/KWh | - | 6 P/KWh | 6 P/KWh | - |
Assam | 5% | 5% | 5% | 5% | 5% | - |
Bihar | 6% | 6% | 6% (Excluding Agri pumping) 0.7% Agri pumping | 6% | 6% | - |
Chandigarh | 9 P/KWh | 11 P/KWh | - | 11 P/KWh | 11 P/KWh | - |
Delhi | 5% | 5% | 5% | 5% | 5% | 5% |
Goa | 20 P/KWh | 70 P/KWh | 20 P/KWh | 70 P/KWh | 70 P/KWh | - |
Gujarat | Rural - 7.5% Urban - 15% | 20% | - | 10% | 15% | - |
Haryana | 15% | 10% | - | 10% | 15% | - |
Himachal Pradesh | 3% | 8% | 10% | Small - 2% Medium - 7% | 17% 11% (Voltage <33 kV) 13% (Voltage >33 kV) | 10 |
Jammu and Kashmir | 15% | 15% | 15% | 15% | 15% | 15% |
Jharkhand | 20-24 | 24-30 | 2 | 5 | 5 | 15 |
Karnataka | 9% | 9% | 9% except on IP Set below 10HP | 9% | 9% | 9% |
Kerala | 10% | 10% | 10% | 10% | 10% | - |
Madhya Pradesh | 9-12% | 9-15% | - | 9% | 15% | - |
Maharashtra | 16% | 21% | - | 7.5% | 7.5% | - |
Manipur | - | - | - | - | - | - |
Meghalaya | 5 | 6 | 6 | 3-5% | - | 5 |
Odisha | 4% | 4% | 2% | 5% | 8% | - |
Punjab | 13% Rural areas - 15% Urban areas - 13% | 13% Rural areas - 15% Urban areas - 13% | - | 13% Rural areas - 15% Urban areas - 13% | 13% Rural areas - 15% Urban areas - 13% | 13% |
Rajasthan | 40 | 40 | 4 | 40 | 40 | 40 |
Tamil Nadu | - | 5% | - | 5% | 5% | 5% |
Uttarakhand | 15 | 15 | - | 20 | 50 | - |
Uttar Pradesh | 5 | 7.5 | - | 7.5 | 7.5 | - |
West Bengal | 10% | 10-15% | - | 2.5-12.5% | 15% | - |
Note:
- The above data is Paisa per KWH.
- The data was published on as per 2021. The rates may be different for 2023.
Source Ref: https://cea.nic.in/wp-content/uploads/fs___a/2023/02/Book_2021.pdf
States that do not charge any tax are:
- Andaman and Nicobar Island
- Arunachal Pradesh
- Dadra and Nagar Haveli
- Daman and Diu
- Lakshadweep
- Mizoram
- Nagaland
- Pondicherry
- Sikkim
- Tripura
Check - Electricity bill Payments
FAQs on Electricity Duty
- What is electricity duty and why is it charged?
Electricity duty is a government tax added to your electricity bill. It is charged to help fund infrastructure and regulate power consumption.
- Who is liable to pay electricity duty in India?
Anyone who consumes electricity, whether a household, business, or factory—is usually required to pay electricity duty, unless they fall under an exemption.
- Are there any exemptions from electricity duty?
Yes. Some government organizations, agricultural users, and renewable energy setups may be exempt from paying electricity duty, depending on state policies.
- How is electricity duty calculated on my bill?
Electricity duty is usually a percentage of the electricity charges (excluding GST). The rate may differ by state and usage type (domestic, commercial, industrial).
- Does electricity duty vary by state?
Yes. Each state in India sets its own electricity duty rates, and the rules can vary based on user category and electricity usage.
- What is the difference between electricity duty and electricity tariff?
An electricity tariff is the base rate you pay for power usage, while electricity duty is a tax added on top of that amount by the government.
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