Solar tariff hike may occur due to discounting tax relief under GST

Feb 16 2017 02:38 PM
Solar tariff hike may occur due to discounting tax relief under GST

The Study of Council on Energy, Environment, and Water has said ‘’The solar sector could see tariffs rise by around 10 percent if current tax exemptions are curtailed in the roll out of GST.’’

There is a growing concern for solar project developers and investors under the Multiple GST rates and their uncertain applicability to different equipment and services.

It is said in a statement that GST could also impact the pace of the second phase of solar park development for additional 20,000 MW capacity announced in the recent Budget
 the key contributors to the increase in solar tariffs as a result of GST would include increase in operations and maintenance cost, panel cost, and financing cost, this is stated in the statement given.

It also mentioned that Increased competitiveness of domestic solar manufacturers could create an additional 37.000 new jobs in the solar manufacturing sector by 2022, it said. Even as India celebrates record low solar tariffs, the CEEW study finds that GST could possibly push up capital cost of a solar project by Rs 45 lakh per megawatt if current tax exemptions were curtailed, setting back the sector in terms of cost competitiveness by about 18 months.

Finance Minister Arun Jaitley announced last month that the GST may be implemented on July 1, 2017.

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