Solar modules to be taxed at 5% under GST as against 18% declared earlier

29.05.2017

Last week, we wrote that the proposed 18% Goods and Service Tax (GST) on solar modules could cause major disruption in the industry and affect over 10 GW of projects. Following uproar in the industry, India’s revenue secretary, Hasmukh Adhia, has clarified that the rate of tax on solar modules should be 5% and not 18%. He said that an official clarification in this regard may be issued on June 3 when the GST council meets next. Earlier last week, secretary for Ministry of New and Renewable Energy (MNRE) had also issued a statement that the 18% rate on solar modules seems to be an anomaly and that it should be corrected.

5% GST rate for solar modules sounds reasonable and consistent with government guidance leading up to the rates announcement. The new tax regime will result in effective rate of indirect taxes to go up from zero to 5% on solar modules and around 3% on engineering and construction services. Impact on inverters is still not clear. Our current estimate is that the total project capital cost will rise by about 4%.

BRIDGE TO INDIA believes that the revised rate structure will not have any material negative impact on the industry because of the buffer afforded by sharp fall in equipment costs. It will allow project developers to proceed with construction. Some developers may still file compensation claims but many of them might simply absorb the additional burden to avoid scrutiny of sensitive commercial information.

As we stated last week, MNRE needs to play a hands-on role by advising all affected entities – project developers, DISCOMs, equipment manufacturers and EPC contractors – to ensure smooth transition for the solar industry.

Bridge To India

Similar Entries

(pict.: Siemens Gamesa)

Siemens Gamesa Renewable Energy (SGRE) has secured a new order in India from ReNew Power, India’s largest renewable energy Independent Power Producer (IPP). The scope includes the supply of 270 units of the SG 2.1-122 wind turbines, with a total capacity of 567 MW, to two wind power facilities.

Pict: Welink

Allianz Capital Partners on behalf of Allianz insurance companies has closed today the acquisition of the 46 MW Ourika project (“Ourika”) in Portugal. The solar farm is fully operational and has been developed by the WElink Group (“WElink”).

Energy Taiwan is the largest and most professional renewable energy trading platform in Taiwan

Energy Taiwan is jointly organized by the Taiwan External Trade Development Council (TAITRA) and SEMI. The event will take place from October 16-18, 2019 at the Nangang Exhibition Center Hall 1. The exhibition will feature four major energy themes, PV Taiwan, Wind Energy Taiwan, HFC Taiwan, and Smart Storage Taiwan. It is expected to attract more than 10,000 domestic and foreign buyers of related industries. Over 15 seminars will be organized during the exhibition. Energy Taiwan is the most important trading platform for renewable energy.

As the pilot phase shows, the patented innovation developed by plusAmpere has enormous potential: The use of the innovative reflector and calculation system improves the worldwide yields of photovoltaic facilities (PV facilities), making them more profitable and cost-efficient (pict. plusAmpere)

The company plusAmpere introduces an innovative “reflector and calculation system” offering an efficient and inexpensive way of increasing the overall yield of existing and newly planned photovoltaic and solar thermal facilities.