GST shines on renewable energy sector | Confusion Remains on Solar Equipment


Posted July 5, 2017 by NicholasEden

With new GST regime claimed as the biggest indirect tax reform, coming into effect, the domestic solar power industry is stimulating for a marginal growth in project costs.

 
With new GST regime claimed as the biggest indirect tax reform, coming into effect, the domestic solar power industry is stimulating for a marginal growth in project costs.

India's Goods and Services tax (GST) Bill was imposed on 1St July, 2017 bringing in a 5% tax on solar PV modules; however there is still doubt around taxes on other solar panels, according to a renewable energy report 2017.

The longed-for tax reforms collect Indian taxes under one umbrella to cease inefficiencies in the system like tax-on-tax when various goods pass in between different states. It also looks for to avert tax avoidance.

India's Prime Minister tweeted that the GST on renewable energy was, integrating India economically while Energy Minister, Piyush Goyal also praised the implementation of the new law tax.

But, an Indian renewable market leading consultancy and service provider mentioned that, other than for PV modules, there is still confusion over what level the tax will be set at for mounting structures, inverters, and other capital goods. They called 4 inverter suppliers working in India today and found an alarming level of conflicting understandings of the GST rules. Of the suppliers contacted, 2 mentioned the GST rate for inverters was 18%, another mentioned it was 5%, while a fourth supplier mentioned it was 5% for end-users and 18% for EPC companies.

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Few of the confusion originate in from certain element, which includes transformers actually being taxed at a lower rate for solar however being slapped a higher tax when used in other non-solar applications.

Both the Ministry of Finance and the Ministry of new and Renewable Energy (MNRE) are assertively working on a resolution.

The GST impact on solar was estimated to have a sizeable impact on the PV industry, it became a controversial topic last May when an authorized announcement was released stating that all solar equipment would be taxed at a jaw dropping 18%, however this was later explained to be at just 5%.

But, the consultancy has now stated that worldwide GST on solar panels are confirming in this quarter due to the extension of the solar feed-in tariff (FiT) deadline in China. It comes at an unfavorable time for the sector.

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Last Updated July 5, 2017
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