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GST on solar equipment, parts at 5%, says Adhia

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

“All solar equipments and its parts would attract 5% GST only,” revenue secretary Hasmukh Adhia said in a tweet on Sunday, contrary to the initially planned two tax slabs of 5% and 18%. 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% tax on all solar power equipment will put the sector on par with domestic coal from 1 July and make solar energy generation more expensive.

The 5% tax, however, is in contrast to a previous notification that had fixed an 18% tax on photovoltaic cells and panels, which account for a bulk of solar power generation costs.

Domestic coal sales now attract a 11.69% duty. State-run Coal India Ltd, saddled with millions of tonnes of unsold coal, is expected to be the biggest beneficiary of the decision.

Mint  New Delhi, 30th May 2017

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