New GST Rate to Make Business Unprofitable, Say Solar Industry Experts

The GST fitment committee’s advice to enhance the tax on solar modules up to 5% to 12 % has forwarded trembling all over the renewable energy industry, as an organization is anxious that if it causes various projects unviable. 

Apparently, the charge of GST on all solar panels is 5 %. It was finalized since the indirect tax system was repaired in 2017. 

“A straight 12% GST for the solar industry will prove to be a catastrophic decision for a huge segment in the renewable energy industry,” asked the top executive from a leading solar power developer.

“Not only will it throw yet another spanner in the works of upcoming projects, but EPC (engineering, procurement, construction) firms will also bear the worst brunt of this decision, the person added.”

The National Solar Energy Federation of India, an industry body that draws the interests of renewable energy developers, has written to the Ministry of Finance seeking relief. “At this juncture, if they are asked to pay for the additional GST, the repercussions would be unimaginable, and the industry could derail given the negative market sentiments continuing to prevail amid the turmoil this industry is already facing,” the federation stated in its letter.

Meanwhile, the going large-scale utility projects which have been proposed by the Centre’s related persons will get offered due to a change-in-law provision, although, personal projects for open approach and commercial and industrial customers will pay the enhanced tax price. 

There is a meeting to decide on the mentioned matter where the 45th GST Council is likely to meet on Friday. Another product would be also included for the analysis are oncology medicines, rubber products and household electronics. 

Solar imports experience an import duty-free period till April 2022. After that, a basic folkways duty of 40% on solar modules and 25% on solar cells will be replenished on imports.

“Maybe this is the government’s way of plugging in the gap on the tax holiday that the developers are taking advantage of till next year. But such a massive increase in taxes will negatively affect the domestic players as well,” announced an official from an Indian manufacturer, asking for anonymity.