Since GST (Goods and Service Tax) began, the government was charging a 5% tax on solar equipment. But now, the solar projects have been moved to the GST slab of 12%. GST rates hike on solar equip from 5% to 12% will have a significant impact on the solar business Furthermore, Due to these significant changes in tax percentage in the solar segment, the companies are worried. Because the updated tax rate will impact their business and ultimately, they need to raise the price of solar equipment and the relevant projects.
The recently updated 12% of the GST slab in the solar industry has put the renewal energy manufacturers in a challenging situation. In this article, we will discuss the latest news of GST Rates Hike on Solar Equip & Projects.
The NSEFI (National solar Energy Federation of India) has written to the Ministry of finance to give some relaxation on tax. India is currently capable of generating 39 GW solar capacity whereas the goal is to reach around 280 GW by the upcoming decade. The NSEFI appeals that the companies involved in EPC (Engineering, Procurement, Construction) shouldn’t be overburdened to achieve the target.
GST Rate on Existing Solar Equip and Projects remain Unchanged
It is important to note that The GST Rate on Existing Solar Equip and Projects would be unchanged for the existing solar projects. It means the companies who have already bid out for the renewable energy projects and are amid the process to complete it will be liable to pay the old GST rate that is 5% only.
The updated GST rate on solar equipment will be applied to the new companies having GST Registration under the solar industry. Also, the same will be applied to the companies that will start working on new solar projects in the near future.
Impact of GST rates Hike on Solar Equip and Projects
Various segments are also impacted by the proposed GST slab of 12% on solar equipment. These are;
- Solar lamp
- Biogas plants
- Tidal waves
- WOEG (wind operated electricity generator)
- Devices that run on Solar power
- Photovoltaic Cells
- Systems that generate solar power
- Machines involved in waste to energy plants
- Ocean waves
- Energy plants
The government may also move some metals like nickel, lead, tin, manganese, iron, chromium, and others from the GST rate of 5% to 18%. The prime reason behind making the changes in the GST slab is to collect more revenue from the companies that have taken GST Registration under the solar segment.
If you want any other guidance relating to the GST Registration, please feel free to talk to our business advisors at 8881-069-069.
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