India clarifies tax on solar power equipment, parts at 5 per cent

India will levy a 5 per cent tax on all equipment required for generating solar power compared with nil duty now, a government official clarified, putting an end to confusion about the new taxation policy for the industry after its landmark tax reform.

“All solar equipments and its parts would attract 5 per cent GST only,” Revenue Secretary Hasmukh Adhia said in a tweet on Sunday, contrary to the initially planned two tax slabs of 5 per cent and 18 per cent.

India, the world’s third biggest greenhouse gas emitter, has set a target to produce 100 gigawatts of solar power in five years to fuel its economic expansion while reducing its carbon footprint.

A flat 5 per cent tax on all solar power equipment will put the sector on par with domestic coal from July 1 and make solar energy generation more expensive.

The 5 per cent tax, however, is in contrast to a previous notification that had fixed an 18 per cent tax on photovoltaic cells and panels, which account for a bulk of solar power generation costs.

Source: Times of India