Current Insights

Concessional GST Rate only for Solar Developers Building their Own Projects

May 15, 2018 05:53 PM

Tagged Sector(s) : Renewable

Solar panels and related equipment attract goods and services tax (GST) at a concessional rate of 5%, only for solar developers who set up their projects on self-basis. Issuance of any type of contract for supply of goods or setting up of a plant would invite a GST of 18%,  as the former extends to implementation, operation and maintenance as well. Since solar developers hardly ever build their own projects but use contractors, the ruling, which is almost certain to serve as a precedent for other states as well, in effect takes away the advantage of the concessional GST rate for solar panels from them.

Solar Developers ought to have a Solar PV Value chain across the segment, which is not common across many developers. Inevitably it will increase their tax burden and in turn may well raise solar tariffs at future auctions.

Article By:
Amit Sharma

Share on:

Copyright 2012. All rights reserved.