The Uttar Pradesh Electricity Regulatory Commission (UPERC) has announced that the recent cut in Goods and Services Tax (GST) on renewable energy equipment from 12% down to 5% is considered a significant legal change. This update impacts projects under the PM-KUSUM Component-C2 scheme, making it possible for power companies to charge lower prices. As a result, consumers can enjoy the benefits of reduced costs on their electricity bills.
The Commission, in a suo motu order dated June 23, 2026, stated that the GST reduction, which became effective from September 22, 2025, reduces the procurement cost of renewable energy equipment and therefore lowers the overall capital cost of solar projects developed under the feeder-level solarisation programme.
Bid Submission date
January 9, 2025, was the last date for bid submission under the PM-KUSUM Component-C2 tender. This date is effectively before the issuance of the Ministry of Finance’s notification reducing GST rates. As the tax amendment arose post-bidding process, it is entitled as a ‘Change in Law’ event under the provisions of the power purchase agreements (PPAs).
UPERC stated that all the financial benefits of the reduced GST rate should be given to the procurer, Uttar Pradesh Power Corporation Ltd (UPPCL), and ultimately to end consumers.
The order relates to the procurement of 2,553.5 MW of grid-connected solar capacity under PM-KUSUM Component-C2, which is being conducted through a tariff-based competitive bidding process. Out of the 1,002 substations identified for this scheme, letters of award have been issued for 566 substations, totalling 1,686.4 MW. Additionally, the Commission has approved 449 PPAs that cover 1,355.5 MW of capacity.
To implement the tariff revision process, the UPERC has mandated the formation of an expert committee for each discom. Each committee will include representatives from the UPNEDA, UPPCL, and the relevant distribution company. Their role will be to evaluate project-specific benefits resulting from the reduction in GST based on documentary evidence such as invoices, payment records, and auditor certificates.
Claim Amount Calculation
Project developers are required to provide calculations and related documents that quantify the impact of the GST reduction within 45 days of the commercial operation date (COD) of their projects. Following this, the expert committees will decide the revised tariffs as per the actual benefits realised from the lower GST rate.
UPERC then asked UPPCL to implement supplementary PPAs incorporating the revised tariffs post-assessment exercise compilation. The utility has been urged to develop a standardised format for collecting project data and computing the financial impact of the GST reduction.
Read Also: GST Impact on Solar Project Prices in India
It is mandated by the commission that UPPCL and project developers finish the complete assessment procedure and submit project-wise information to the regulator within 90 days of the commercial operation date of each project.
Read Official Order
