GST Rate on Treated Water Sold by Effluent Treatment Plants
The Tamil Nadu Authority for Advance Ruling confirmed that treated water sold for industrial reuse attracts a Nil GST rate.
- Ruling
- Advance Ruling No. 31/AAR/2023 Dated: 30.08.2023
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked for the GST classification of treated effluent water.
- The authority classified the water under HSN 2201.
- The ruling confirms a Nil GST rate applies to this treated water.
In short
A common effluent treatment plant asked the Tamil Nadu Authority for Advance Ruling (AAR) about the GST rate for treated water sold back to member units. The authority had to decide if this water counts as 'purified' or 'de-mineralized' water, which would be taxable, or ordinary water, which is exempt.
What has changed
How it worked before
It was unclear whether water processed by industrial treatment plants should be taxed as a manufactured product or treated as exempt water.
What has changed
The authority ruled that because the water is not for human consumption and still contains impurities, it qualifies for a Nil GST rate under existing exemptions. This means businesses performing similar environmental treatment can supply this water without charging GST.
Who this affects
Common effluent treatment plants and industrial units that process and sell treated wastewater.
An example
A textile cluster in Gujarat operates a treatment plant to recycle water for its members. They wonder if they must charge GST on the water they sell back to the factories. Based on this ruling, if their water is not purified or de-mineralized for human use, they may have a strong case for a Nil GST rate, but they should seek their own ruling to be certain.
What you should do
This ruling only applies to the specific business that asked the question. If you operate a similar plant, you should consult with your tax advisor to see if your specific treatment process and water quality match the criteria used in this decision before deciding not to charge GST.
If you do nothing
If you assume this ruling applies to you and stop charging GST, your local tax officer may disagree with your classification. If they decide the water is taxable, you will be liable for the unpaid GST, interest, and potential penalties for failing to collect the tax.
The terms explained
- HSN 2201
- A code used in the GST system to classify water, including natural mineral and aerated waters.
- Effluent
- Liquid waste or sewage discharged into a river or the sea, often from industrial processes.
- De-mineralized water
- Water from which all mineral salts have been removed, often used in specialized industrial or laboratory settings.
The ruling in detail
Authority for Advance Ruling
Sirupooluvapatti Common Effluent Treatment Plant Private Limited
Advance Ruling No. 31/AAR/2023 Dated: 30.08.2023 · Tamil Nadu
Questions before the authority
- What is the appropriate classification of the treated water that would be sold by the Applicant, after carrying out various treatment process on the effluent water purchased by them?
- What is the rate of GST applicable on the said treated water which would be sold by the Applicant?
Facts
The applicant is a common effluent treatment plant that processes effluent water received from member dyeing units to obtain reusable water. They proposed to purchase raw effluent, treat it, and sell the resulting treated water back to member units. The applicant sought a ruling on the classification and GST rate applicable to this treated water.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of treated water | HSN 2201 Falls under Sl. No. 99 of Notification No. 02/2017-Central Tax (Rate) |
| Applicable GST rate | Nil Eligible for exemption under Notification No. 02/2017-Central Tax (Rate) |
The Authority ruled that the treated water is classified under HSN 2201 and is eligible for a Nil rate of GST. It determined that the treated water is not de-mineralized or purified water in the commercial sense, but rather ordinary water suitable for industrial reuse.
Reasoning
The Authority reasoned that the treated water does not meet the criteria for 'purified' or 'de-mineralized' water, as it still contains impurities and is not intended for human consumption. It relied on the exemption provided under Sl. No. 99 of Notification No. 02/2017-Central Tax (Rate), which covers water other than aerated, mineral, distilled, medicinal, ionic, battery, or de-mineralized water. The ruling also referenced Circular No. 179/11/2022, which clarified that treated sewage water attracts a **Nil rate of GST**. The Authority concluded that the process is primarily for environmental compliance and conservation rather than the manufacture of specialized water products.
Provisions relied on
- Notification No. 02/2017-Central Tax (Rate)
- Circular No. 179/11/2022
- Section 97(2)(g) of the CGST Act
For the practitioner
This ruling provides a **favorable precedent** for common effluent treatment plants seeking to supply treated water to member units at a Nil GST rate. It clarifies that such treated water, when not meeting the standards of purified or de-mineralized water, qualifies for the exemption under Sl. No. 99 of the relevant notification. Practitioners should note that this applies specifically to water treated for industrial reuse and not for human consumption.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/31_sirupooluvapatti_cetp.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
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