Reviewed by Ashish Shah, Managing Director15 October 20269 min readSource: Gujarat Electricity Duty Act, 1958 · CEICED e-services
A new industrial undertaking in Gujarat pays no electricity duty for five years from the date it first manufactures or produces goods — Section 3(2)(vii) of the Gujarat Electricity Duty Act, 1958. The duty it escapes is 15% of consumption charges on an HT connection, 10% on LT and 60 paise a unit on power it generates itself. An additional unit or expansion outside an SEZ gets the same five years on its own metered consumption (Section 3(2)(viii)) when its new plant and machinery is at least 50% of the existing gross block; a new unit in an SEZ gets ten years. The exemption is not automatic and it does not depend on taluka category: the unit applies online to CEICED for a certificate of eligibility within 90 days of the production date. On ₹25 lakh of monthly HT consumption charges in Dahej, that is ₹3.75 lakh a month, ₹45 lakh a year and ₹2.25 crore over five years that never appears on the bill.
Electricity duty rate in Gujarat for industries: 15% on HT, 10% on LT, 60 paise a unit on DG power
Electricity duty is a State tax on the consumption of electricity, levied under Section 3(1) of the Act and collected by your DISCOM with every bill. For an industrial undertaking (Section 2(bb)) the rates are in Schedule I, Part I, item 3 for power bought from a licensee and Schedule II, Part I, item 4 for power the unit generates itself.
Swipe sideways to see every column
| Supply | Rate of duty | Source |
|---|---|---|
| HT supplyvoltage above 650 volts under normal conditions | 15%of consumption charges | Schedule I, Part I, item 3(a) |
| Exclusively LT supplyvoltage up to 650 volts | 10%of consumption charges | Schedule I, Part I, item 3(b) |
| Self-generated powerDG sets and captive plants — units consumed by the unit | 60 paisea unit, since 1 August 2019 | Schedule II, Part I, item 4; 2019 amendment (55 paise before) |
| Non-industrial premisescommercial and other use | 20%of consumption charges, from 1 April 2020 | Schedule I, Part I, item 4; Amendment Act, 2020 |
“Consumption charges” means what you pay the licensee for the energy, excluding meter charges, interest on delayed payment, fuse-off call and reconnection charges, and transmission and transformation losses (Explanation to Schedule I, Part I). Where a month’s units fall below the minimum, duty is on the units actually consumed (proviso (b)).
Duty is a percentage of the bill, so every tariff revision raises it. And the rate is the same across the State — no Category A or Category B here, unlike the ₹2 or ₹1 a unit power tariff subsidy under the Viksit Gujarat Industrial Policy 2026, a separate benefit that runs alongside it.
Who qualifies for the electricity duty exemption in Gujarat, and who does not
Section 3(2) lists the consumption on which duty “shall not be leviable”. Three clauses matter to a manufacturer; each needs a certificate of eligibility before the DISCOM stops charging.
New industrial undertaking
Motive power and lighting in industrial premises, for five years “from the date on which such industrial undertaking begins to manufacture or produce goods for the first time”. MSME or Large, anywhere in Gujarat.
Additional unit or expansion
An additional unit of an existing undertaking “at different independent and identifiable premises”, for five years from the day it first manufactures. Duty is waived on its own consumption only.
New unit in an SEZ
Ten years for a new unit in a Special Economic Zone, under the Gujarat Special Economic Zone Act, 2004. An expansion or additional unit inside an SEZ does not get the exemption at all.
The Explanation to clause (vii) defines a “new industrial undertaking” by what it is not. The line falls here:
- Qualifies: manufacturers and processors — an undertaking engaged predominantly in making goods, including job work that results in manufacture (Section 2(bb)). Size, sector and taluka do not matter.
- Qualifies: the factory’s own office — “office” left the exclusions in Section 2(cc) in 2013. Residence, commerce, sports, club, library and canteen premises are excluded.
- Qualifies: a unit in an existing or rented shed. The Amendment Act, 2020 deleted “a building” from the Explanation to both clauses from 1 April 2020; new machinery in an old shed is still a new undertaking.
- Qualifies: imported second-hand machinery. Explanation (b) catches only plant “previously used in India”.
- Does not qualify: a split or reconstruction of a business already in existence in the State (Explanation (a)).
- Does not qualify: transferred Indian machinery beyond the notified share of the investment (Explanation (b)) — the sister-unit shift.
- Does not qualify as “new”: an expansion of the existing business (Explanation (c)). It must qualify as an additional unit under clause (viii) instead — the 50% test below.
- Does not qualify: eateries making food or drinks “meant ordinarily for consumption on the premises” (Section 2(bb)).
The exemption is for “motive power and lighting” in industrial premises. A workers’ colony, canteen or club on the same plot is chargeable — meter them separately before the connection is released, or the mixed consumption is charged at the higher rate.
Additional units and expansions: the 50% new plant and machinery test
Clause (viii) covers an “additional unit of the industrial undertaking” at “different independent and identifiable premises” — a new line in a new shed on the same plot, or a new unit on a separate plot. Its five years run from the day it first manufactures, and it needs its own certificate (proviso to clause (viii)). The existing plant keeps paying duty.
The clause carries no percentage. The test CEICED applies in practice — and the one we check before filing — is that the additional unit’s new plant and machinery must be at least 50% of the gross block of the existing plant and machinery. Building cost is not counted: since the 2020 amendment the Explanation speaks only of “machinery or plant”.
The arithmetic
Existing plant and machinery with a gross block of ₹20 crore needs at least ₹10 crore of new plant and machinery in the additional unit. A ₹4 crore shed adds nothing to the test.
Not the VGIP 2026 test
Para 1.5 of the MSME GR wants 50% more gross fixed capital investment excluding land, 60% of it in plant and machinery, and 50% more installed capacity. A project can pass one test and fail the other.
The meter
The waiver applies to the additional unit’s own consumption. Install the sub-meter before production starts; without it the exempt units cannot be measured.
What the exemption is worth: an HT unit in Dahej and an LT unit in Changodar
Two round-figure new units that apply to CEICED inside the 90 days. The saving is the duty line on the bill: monthly consumption charges × the Schedule rate × 60 months. Taluka category plays no part.
Swipe sideways to see every column
| Line | Chemical intermediates unit, Dahej | Packaging unit, Changodar |
|---|---|---|
| Connection | HT supply from DGVCL — duty at 15% | LT supply from UGVCL — duty at 10% |
| Monthly consumption charges | ₹25,00,000 | ₹2,50,000 |
| Duty on the bill each month | ₹3,75,000₹25,00,000 × 15% | ₹25,000₹2,50,000 × 10% |
| Duty a year | ₹45,00,000₹3,75,000 × 12 | ₹3,00,000₹25,000 × 12 |
| Duty over the five exempt years | ₹2,25,00,000₹45,00,000 × 5 — ₹2.25 crore | ₹15,00,000₹3,00,000 × 5 — ₹15 lakh |
| Captive DG power | 20,000 units a month × 60 paise = ₹12,000 a month, ₹7,20,000 over five years — exempt if the set is in the application | One 82.5 kVA set — within the 125 kVA limit, no duty either way |
| Total duty saved over five years | ₹2,32,20,000about ₹2.32 crore | ₹15,00,000₹15 lakh |
| If the application is filed four months late | ₹15,00,000 forfeited4 × ₹3,75,000 — the window does not move | ₹1,00,000 forfeited4 × ₹25,000 |
Had the Dahej plant been a new unit inside the Dahej SEZ, the same arithmetic would run for ten years: ₹4.5 crore on the bill alone. The Changodar figure is small because LT supply is charged at 10% and its bill is a tenth of the Dahej plant’s.
The exemption is worth exactly the duty line, every month, for 60 months — nothing capped, nothing paid back. The last row is the one mistake that changes the total: under Rule 11(3) of the Bombay Electricity Duty (Gujarat) Rules, 1986 a late application forfeits the lapsed months, and the five years still end on the original date. The month-by-month cost is in our note on Gujarat’s 90-day rule for electricity duty exemption.
How to get the electricity duty exemption certificate in Gujarat: five steps
The proviso to clause (vii) makes the certificate a condition of the exemption: no new undertaking “shall be entitled” to it unless it has applied in the prescribed form, within the prescribed period, to the prescribed officer — CEICED, the Chief Electrical Inspector and Collector of Electricity Duty, within 90 days of the date production starts.
Set the connection up for the exemption
Take the HT or LT connection in the unit’s own name; meter housing and canteen separately; for an additional unit, install the sub-meter before production.
Before the connection is releasedRecord the first day of manufacture
The five years run from the day the unit first manufactures or produces goods — not the first sale bill, the first DISCOM bill or the certificate. Note it in the production register that day.
Day one of productionApply online to CEICED
File on CEICED e-services with proof of investment in new plant and machinery, the connection papers and the production evidence, and put every DG set in the same application.
Within 90 days of productionAnswer queries and the inspection
Replies should match the invoices, meter details and dates already filed. The 90 days do not pause for queries, so file first and perfect the file on query.
As raisedSend the certificate to the DISCOM and claim the refund
Give the certificate to DGVCL, UGVCL, MGVCL, PGVCL or Torrent Power. The next bill should carry a zero duty line, and duty billed since the production date is refunded or adjusted. Diary the fifth anniversary — duty resumes the day after.
On issue · Year 5
Claim it alongside the VGIP 2026 package. Para 18 of the MSME GR and para 7 of the Large GR say units “shall be eligible to receive exemption from electricity duty as applicable under the Gujarat Electricity Duty Act, 1958”. It is a statutory exemption outside the capital, interest and power tariff subsidy ceiling, so the two run together. When the five years end, a furnace-based unit on HT can claim the 10% furnace duty rate instead of 15%, and generators above 125 kVA go back to 60 paise a unit on DG power.
Electricity duty exemption for new industrial units in Gujarat: frequently asked questions
What is the electricity duty rate in Gujarat for industries?
An industrial undertaking pays 15% of consumption charges on an HT connection (supply above 650 volts) and 10% if it is exclusively on LT, under Schedule I, Part I, item 3 of the Gujarat Electricity Duty Act, 1958. Power it generates for its own use carries 60 paise a unit under Schedule II (since 1 August 2019). Commercial premises pay 20%.
What is the electricity duty exemption scheme in Gujarat for new industrial units?
Section 3(2)(vii) of the Gujarat Electricity Duty Act, 1958 exempts a new industrial undertaking from electricity duty on motive power and lighting for five years from the date it first manufactures or produces goods. Additional units and expansions outside an SEZ get five years on their own consumption under Section 3(2)(viii); a new unit in an SEZ gets ten years. A certificate of eligibility from CEICED is compulsory.
How do I get an electricity duty exemption certificate in Gujarat?
Apply online to the Chief Electrical Inspector and Collector of Electricity Duty (CEICED) within 90 days of the date production starts, with proof of investment in new plant and machinery, the connection in the unit’s name and the production evidence, and include any DG sets. Once the certificate issues, send it to your DISCOM: the duty line drops to zero and duty billed since the production date is refunded.
Does the five-year exemption run from the date of commercial production (DoCP)?
No. The Act counts the five years from the date on which the undertaking “begins to manufacture or produce goods for the first time” (Section 3(2)(vii)). The VGIP 2026 GRs count DoCP from the first commercial sale bill, which can be weeks later. Record the first day of manufacture on the day itself and file with CEICED within 90 days of it, not of the first invoice.
Does an expansion qualify for electricity duty exemption in Gujarat?
Yes, outside an SEZ, as an additional unit under Section 3(2)(viii): five years from the date the additional unit first manufactures, on its own separately metered consumption, with its own certificate applied for within 90 days. In practice CEICED requires the new plant and machinery to be at least 50% of the existing plant and machinery gross block; building cost is not counted since the 2020 amendment.
Is electricity duty exemption part of the Viksit Gujarat Industrial Policy 2026 subsidy ceiling?
No. Para 18 of the MSME GR and para 7 of the Large GR provide for the exemption “as applicable under the Gujarat Electricity Duty Act, 1958”. It is a statutory exemption, not a component of the combined ceiling for capital, interest and power tariff subsidy, so a new unit claims the duty exemption and the ₹2 or ₹1 a unit power tariff subsidy together.
Does the exemption cover power from a DG set?
Yes, when the set is included in the CEICED application. Self-generated power used by an industrial undertaking carries duty of 60 paise a unit under Schedule II, and the exemption covers it for the same five years. Sets totalling 125 kVA or less pay no duty in any case, but still have to be registered. A set added to the file later is exempt only for the remaining period.
Starting production in the next few months?
Send us the connection type, the investment in plant and machinery and the expected production date. We confirm what the exemption is worth, check the 50% test for an additional unit, and file with CEICED inside the 90 days — DG sets included.
Written by the NeoApex Saver advisory team · Reviewed by Ashish Shah, Founder and Managing DirectorNeoApex Saver Pvt Ltd (formerly Apex Consultants) has filed Gujarat industrial incentive claims for over twenty years — 300+ projects, 99% filing success. Every figure in this article is taken from the Government Resolution linked above; worked examples and the reading of grey areas are ours.Last reviewed 15 October 2026 · About the team · Report a correction