A higher GST is being levied on cells, modules and inverters from 1 Oct after the 45th GST council meeting held on 17 Sept recommended increasing the GST on ‘Specified Renewable Energy Devices and parts’ from 5% to 12%
NEW DELHI : India's solar power tariffs are expected to touch ₹2.6-2.7 per unit due to the increase in the goods and services tax (GST) on renewable energy equipment and a proposed customs duty on imported solar modules, according to Crisil Ratings.
A higher GST is being levied on cells, modules and inverters from 1 October after the 45th GST council meeting held on 17 September recommended increasing the GST on 'Specified Renewable Energy Devices and parts' from 5% to 12%.
This comes in the backdrop of solar tariffs firming up in the recent auctions rounds as compared to a record low of ₹1.99 per unit in December 2020. India's solar tariffs are on an upswing due to factors such as higher commodity prices and a 40% basic customs duty on solar modules and 25% on solar cells to be imposed from April 2022. "The Government of India has increased the GST on critical components of a solar project such as photovoltaic cells and modules from 5% to 12% with effect from October 1, 2021. This has increased the total taxation on a solar project from 8-9% to 12-13%1. It will more than double to ~30% when customs duty of 40% on imported solar modules kicks in from April 1, 2022," Crisil Ratings said in a statement.
The spike in global conventional fuel prices such as crude oil, gas and coal is now playing out in the solar space with module prices touching 28 cent kilowatt-hour (kWh), the highest since 2019.
