GST UPDATE: Confusion Reigns around GST for Solar Systems, MNRE Wants 5 Percent Rate for All Components


There is still a lot of confusion around GST for solar systems, which has created a lot of uncertainty in the solar sector. Tender activity has come to a standstill and nobody wants to sign new PPAs without knowing what the final GST rates are.

To provide some clarity to the sector we previously spoke with multiple sources in the MNRE who gave us the GST rate list last week and categorically confirmed that these numbers were final. MNRE has now published a memo asking the industry for feedback implying the GST rates are still not final.

Seeing the possible negative effects on the sector from a GST rate higher than 5 percent, the MNRE is now recommending that GST rates for all solar components should be at 5 percent. The GST council has pushed this recommendation to the Revenue Department.

As of now we are told that nothing is final and there is a lot of ambiguity and incoherence on this topic.

An MNRE official said, “These were the rates that have been suggested to the MNRE and based on that we came up with cost escalation. Initially there was not much clarity regarding the GST rates for solar, so we thought general rates specified under the various tax slabs will apply. While at the same time, the GST council was carrying on discussions regarding rates for the renewable energy sector.”

We were told again that final rates will be announced soon. The whole Indian solar sector is waiting with its fingers crossed.

Image Credit: By Tiven Gonsalves (Own work) [CC BY-SA 4.0], via Wikimedia Commons


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