(LiveMint)
A likely decision by the powerful federal indirect tax body, the Goods and Service Tax (GST) Council, to levy 5% tax on solar panels instead of 18% proposed earlier could mean only a marginal rise of 4% in solar power projects cost on account of bringing the item under taxation, said consulting firm Bridge to India (BTI) in a note on Monday.
Reducing tax exemptions is one of the underlying principles of GST. The 5% tax rate on solar panels would effectively mean that bringing panels under the tax net will not hurt the flourishing sector – something that the solar power industry feared last week. The solar industry had so far enjoyed tax exemption.
Last week, BTI had said that the GST Council’s decision to set 18% tax rate for solar modules as compared to a present effective rate of zero will increase overall project costs by about 12%. It had also said that the new rates would hit more than 10 gigawatt of ongoing utility scale solar power projects and pose a threat to their viability.
However, union revenue secretary Hasmukh Adhia tweeted on Sunday saying that all solar equipment and their parts will attract only 5% GST, indicating that the GST Council meeting on 3, June, is likely to make the change in the schedule of tax rates.
