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  3. Cost of solar projects witness 12% rise led by GST: AISIA

Cost of solar projects witness 12% rise led by GST: AISIA

14 Dec 2017 Evaluate

The All India Solar Industries Association (AISIA) has stated that overall cost of solar project has witnessed 10-12% rise, led by implementation of goods and services tax (GST) regime. While urging the government to remove uncertainty, it said that solar power cost will see an upward escalation under the new tax regime. Besides, it pointed out that while solar power generating systems fall under 5 percent tax bracket, procurement and supply of equipment like module mounting structures, trackers, inverters, transformers and cables are being charged the GST at varying rates.

The association further said that the equipments are charged GST as applicable on individual items rather than treating them as a part of solar power generating system. It also said that solar modules were exempt from all duties in the pre-GST regime but since July 1 they are being charged 5 percent GST. It also indicated that inverters, cables and transformers were levied by 2 percent central sales tax and excise was exempt but post GST they are charged 5-8 percent tax. It added that likewise, the tax incidence on services and civil work has risen to 18 percent from 15 per cent and 6 percent respectively previously.

AISIA has said that presently, the power developers cannot avail the benefit of GST for the electricity produced leading to a detrimental effect towards achieving target of National Solar Mission. Under National Solar Mission, the target for setting up solar capacity increased from 20 GW to 100 GW by 2021-22. Further, it suggested re-introduction of MNRE-certification or self-certification supported by an undertaking that such equipment is required for the setting up of a solar power generating system. It stated that since solar power generating systems are already charged to 5 percent GST, there should be no GST on such equipments which are part and parcel of the generating system. It also feels that an urgent intervention is required in an effort to maintain the cost of solar power low and incentivise renewable energy deployment.

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