CERC allows GST relief for solar projects

By: | Updated: September 22, 2018 2:26 AM

Providing a relief to solar power developers, the Central Electricity Regulatory Commission (CERC) has held that the introduction of the GST would be considered as ‘change in law’.

CERC allows GST relief for solar projects

Providing a relief to solar power developers, the Central Electricity Regulatory Commission (CERC) has held that the introduction of the GST would be considered as ‘change in law’.

However, the regulator said solar tariffs discovered through reverse auctions cannot be changed due to GST implications and the relief for ‘change in law’ should be allowed as a separate element “on one-time basis in a time bound manner”.

The GST rate on solar power generating systems and raw material used including modules is at 5%. However, other goods such as inverter, cement and cables have been kept under the 18% bracket. Further, the GST on services such as works contract service, technology which are typically used in setting up of a solar power plant has been kept at 18%.

The CERC has directed petitioners Prayatna Developers and Azure Power to exhibit clear and one-to-one correlation between projects, supply of goods or services and invoices raised by the supplier of goods and services backed by auditor certificate. However, it denied compensation on account of additional tax burden on operation and maintenance expenses.

Analysts at Bridge to India had said last year the new tax regime would have a marginally negative impact on the solar industry.

Responding to requests from solar plant developers, the Ministry of New and Renewable Energy (MNRE) had extended the commissioning period for projects hurt by the disruption caused by the introduction of the GST from July 2017. Extensions would be applicable for projects which were supposed to be commissioned, or submitted proofs of funding arrangements made for developing power plants in July-August 2017.

The government also relaxed the timeframes for land acquisition, financial closure and commissioning period for solar projects.

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