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The government will levy a 5 per cent tax on all equipment required for generating solar power compared with nil
duty now, a government official clarified, putting an end to confusion about the new taxation policy for the
industry after its landmark tax reform.
All solar equipments and its parts would attract 5 per cent GST only, Revenue Secretary Hasmukh Adhia said in
a tweet on Sunday, contrary to the initially planned two tax slabs of 5 per cent and 18 per cent.
India, the worlds third biggest greenhouse gas emitter, has set a target to produce 100 gigawatts of solar power in
five years to fuel its economic expansion while reducing its carbon footprint.
A flat 5 per cent tax on all solar power equipment will put the sector on par with domestic coal from July 1 and
make solar energy generation more expensive.
The 5 per cent tax, however, is in contrast to a previous notification that had fixed an 18 per cent tax on
photovoltaic cells and panels, which account for a bulk of solar power generation costs.
Domestic coal sales now attract a 11.69 per cent duty. State-run Coal India Ltd, saddled with millions of tonnes of
unsold coal, is expected to be the biggest beneficiary of the decision.
A tax on solar parts could hurt the young and booming industry, which relies heavily on cells imported from
China. Solar tariffs in India had fallen to a record low of 2.44 rupees ($0.0378) per unit earlier this month.
India is extending capital subsidies and cheaper loans for clean energy to help meet Prime Minister Narendra
Modis goal of raising renewable energy capacity by more than five times in the next five years to fight climate
change.
Solar power generation capacity in India has more than tripled in less than three years to over 12 GW, helped by
lower module prices and borrowing costs. ($1 = 64.5400 Indian rupees)
Source: ET
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7/3/2017 GST for Solar at 5%, Govt issues clarification | Solar for India
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