We can see a person standing in front of our house from electricity board, whose duty is to read the energy meter and handover the bills to the owner of that house every month. This is nothing but meter reading. According to that reading we have to pay the bills. The main drawback of this system is that person has to go area by area and he has to read the meter of every house and handover the bills. Many times errors like extra bill amount, or notification from electric board even though the bills are paid are common errors. To overcome this drawback we have come up with an idea which will eliminate the third party between the consumer and service provider, even the errors will be overcome. In this paper the idea of smart energy meter using IoT and Arduino have been introduced. In this method we are using Arduino because it is energy efficient i.e. it consume less power, it is fastest and has two UARTS. In this paper, energy meters which is already installed at our houses are not replaced, but a small modification on the already installed meters can change the existing meters into smart meters. The use of GSM module provides a feature of notification through SMS. One can easily access the meter working through web page that we designed. Current reading with cost can be seen on web page. Automatic ON & OFF of meter is possible. Threshold value setting and sending of notification is the additional task that we are performing)