Solar power equipment, parts to attract 5 percent tax under GST regime

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India will levy a 5 percent tax on all equipment required for generating solar power compared with nil duty now, Revenue Secretary Hasmukh Adhia clarified, putting an end to confusion about the new taxation policy for the industry after its landmark tax reform.

solar power equipment, GST, tax, India

“All solar equipment and its parts would attract 5 percent GST only,” Revenue Secretary Hasmukh Adhia said in a tweet, contrary to the initially planned two tax slabs of 5 percent and 18 percent.

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India, the world’s 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 percent 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 percent tax, however, is in contrast to a previous notification that had fixed an 18 percent tax on photovoltaic cells and panels, which account for a bulk of solar power generation costs.

By Baishakhi Dutta

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