Centre prohibits states from imposing taxes on electricity generation

31 Oct 2023 CW Team

According to the ministry, the power to impose taxes or duties is explicitly outlined in the VII Schedule. Entries 45 to 63 of List-II in the VII Schedule delineate the states' authority to levy taxes or duties. Any taxes or duties not specified in this list cannot be imposed by state governments, as residual powers lie with the central government.

Entry 53 of List-II permits states to tax the consumption or sale of electricity within their jurisdiction. However, this does not extend to taxing the generation of electricity. Since electricity generated in one state might be consumed in another, no state has the jurisdiction to levy taxes or duties on residents of other states.

Article 286 of the constitution prohibits states from imposing taxes or duties on the supply of goods, services, or both, if the supply occurs outside the state. Additionally, Articles 287 and 288 prevent the imposition of taxes on the consumption or sale of electricity used by the Central government or sold to the Central government for its consumption or that of its agencies.

Considering these constitutional provisions, no state can levy taxes or duties on the generation or interstate supply of electricity under the guise of additional charges or fees, regardless of the source?whether thermal, hydro, or renewables.

The central government has instructed states to promptly eliminate any form of tax, duty, or cess imposed under the pretence of development fees or funds on electricity generation from any source. This directive follows a prior communication from the Ministry in April, urging states not to impose taxes or duties on electricity generation, especially from hydro projects.

The central government has issued a circular, emphasising that states do not possess the authority to impose taxes or duties on electricity generated from any source, be it coal, hydro, wind, or solar. Such levies are deemed illegal and unconstitutional. The Union Ministry of Power clarified that certain state governments had imposed extra charges on electricity generation, disguising them as development fees or funds. According to the ministry, the power to impose taxes or duties is explicitly outlined in the VII Schedule. Entries 45 to 63 of List-II in the VII Schedule delineate the states' authority to levy taxes or duties. Any taxes or duties not specified in this list cannot be imposed by state governments, as residual powers lie with the central government. Entry 53 of List-II permits states to tax the consumption or sale of electricity within their jurisdiction. However, this does not extend to taxing the generation of electricity. Since electricity generated in one state might be consumed in another, no state has the jurisdiction to levy taxes or duties on residents of other states. Article 286 of the constitution prohibits states from imposing taxes or duties on the supply of goods, services, or both, if the supply occurs outside the state. Additionally, Articles 287 and 288 prevent the imposition of taxes on the consumption or sale of electricity used by the Central government or sold to the Central government for its consumption or that of its agencies. Considering these constitutional provisions, no state can levy taxes or duties on the generation or interstate supply of electricity under the guise of additional charges or fees, regardless of the source?whether thermal, hydro, or renewables. The central government has instructed states to promptly eliminate any form of tax, duty, or cess imposed under the pretence of development fees or funds on electricity generation from any source. This directive follows a prior communication from the Ministry in April, urging states not to impose taxes or duties on electricity generation, especially from hydro projects.

Infrastructure Urban

17 Sep 2025

DCPC Prepares for Special Campaign 5.0 with Focus on E-Waste

The Department of Chemicals and Petrochemicals (DCPC), Ministry of Chemicals and Fertilisers, is gearing up for Special Campaign 5.0, to be held from 2nd to 31st October 2025. The initiative will focus on e-waste disposal as per MoEFCC’s E-Waste Management Rules 2022, space optimisation, and enhancing workplace efficiency across field offices.Special Campaign 4.0, conducted between October 2023 and October 2024, delivered notable results in record management, grievance redressal, scrap disposal, and cleanliness drives.Key outcomes of Special Campaign 4.0Records management: 2,443 physical fil..

Real Estate

17 Sep 2025

BlackRock India Leases 1.4 Lakh Sq Ft in Bengaluru

BlackRock Services India, the domestic arm of global asset manager BlackRock, has leased 1.4 lakh sq ft of office space at IndiQube Symphony in Bengaluru, according to Propstack data. The 10-year deal is valued at around Rs 4.10 billion.The lease, among the largest transactions in India’s co-working sector, highlights the growing preference of global institutions for flexible office providers. The agreement, commencing October 1, 2025, covers ground plus five floors in KNG Tower 1 at Ashoknagar, MG Road — one of Bengaluru’s prime commercial hubs.As per the lease document, BlackRock will ..

Infrastructure Transport

17 Sep 2025

L&T Bags Rs 25–50 Bn Order for Mumbai-Ahmedabad Bullet Train Track Works

Larsen & Toubro’s (L&T) Transportation Infrastructure business has secured an order valued between Rs 25 crore and Rs 50 billion from the National High Speed Rail Corporation Limited (NHSRCL) for the Mumbai-Ahmedabad High Speed Rail (MAHSR) corridor.The contract, Package T1, involves the design, supply, construction, testing, and commissioning of 156 route km of high-speed ballastless track on a Design-Build Lump Sum Price basis. The stretch runs from Mumbai’s Bandra-Kurla Complex to Zaroli village in Gujarat and includes 21 km of underground track and 135 km of elevated viaduct.Se..