GST to push up solar tariff

5% tax on panel equipment will result in 2-3% rise in unit price

​Hyderabad: The latest decision of the GST Council to impose 5 per cent GST on solar panel equipment is expected to push tariff by 2-3 per cent. Contrary to concerns that the Centre might impose 18 per cent on solar panel equipment, the Council has decided to fix it up at 5 per cent.

Solar panel equipment fall under Chapter 85 of the Goods and Services Tax (GST) rate schedule and include diodes, transistors and similar semiconductor devices, photosensitive semiconductor devices including photo voltaic cells, light emitting diodes (LED) and mounted piezoelectric crystals. “The 5 per cent tax under GST will push solar tariff by 2-3 per cent.

The current tariff is hovering at Rs 2.44 per unit with land given by the government and other policy support,” Devendra Surana, MD, Bhagyanagar India Limited, told The Hans India. The company is engaged in non-conventional energy (wind, solar) generation. It runs 5-MW solar unit in Medak district and is in the process of expansion.

Earlier, it was proposed that 18 per cent GST on solar panel equipment. Assuming a GST of 18-23 per cent, it was expected that it would increase solar energy project costs by 12-18 and generation costs by 40-50 paise per unit.

Surana adds: “Before GST, we had five per cent VAT in Telangana state. States like Maharashtra and Tamil Nadu exempted solar panel equipment from VAT. So, it was expensive to the extent of VAT in Telangana.

With GST coming into force from July 1 across the country, we'll have level playing field in the domestic solar power segment. Moreover, we can also claim GST credit, which was not available for solar power producers in Telangana. We're happy that GST of five per cent has been fixed otherwise, the project cost would go up by over 18 per cent.”

Revenue Secretary Hasmukh Adhia responding to industry queries on twitter, said, “All solar equipment and parts would attract five per cent GST only.”

The solar power sector expressed its concerns over the proposed 18-23 per cent GST, when India aims 175 gigawatts of renewable energy generation by 2022.

Out of the total power generation target, 100 GW would be from solar power, 60 GW from wind, 10 GW from biomass and 5 GW from small hydro power. To achieve the proposed capacity of 100 GW target by 2022, the overall investment required would be around Rs 6 lakh crore and so keeping the duties down on solar power equipment is necessary.

The GST Council has already decided on a five per cent tax rate on solar water heater and system, renewable energy devices and spare parts for their manufacture, bio-gas plant, solar power-based devices, solar power generating system and wind mills and wind operated electricity generator.

The GST Council had brought down the levy on coal to five per cent from the current tax incidence of 11.69 per cent. With the lower GST rate on coal, the net value of dry fuel to the consumer is likely to come down. The GST Council had earlier this month fitted over 1,200 goods and 500 services in the tax brackets of 5, 12, 18 and 28 per cent.