Tax cut on solar inputs, devices to boost PPAs

Green Savings

- Arunima Bharadwaj

The proposed reduction of GST on renewable energy devices and equipment to a uniform 5% from 12% is expected to lower project costs and accelerate the capacity addition needed to meet India's clean energy targets, according to the industry.

Moreover, a reduced GST may also result in lower tariffs for discoms, which may help accelerate the signing of power purchase agreements.

As per Icra, the rationalisation of GST rates for solar PV modules and wind turbine generators is expected to reduce the capital cost for solar and wind power projects by ~5%. This is expected to reduce the cost of generation for solar power projects by ~10 paise per unit and for wind power projects by ~15-17 paise per unit.