The government of India has released tax slabs for various commodities to be affected by the implementation of the Goods and Services Tax (GST). According to the government document, GST Council’s decision is not final and will be subject to further vetting and the list may undergo some changes. Solar cells and modules have been given an 18 percent tax rate and solar water heater systems, solar power based devices, solar power generating systems, solar lanterns and lamps fall under the 5 percent rate slab. Coal meanwhile gets a lower GST rate of 5%.
When questioned on the impact of the higher tax slab for solar cells and modules on the viability of solar projects, the Minister for Power, Coal, New and Renewable Energy and Mines, Mr. Piyush Goyal said, “Tariffs for solar projects vary from project to project. The rise will be compensated by the decline in corruption and operational difficulties. The prices of solar and wind energy have hit a record low and the industry is now able to stand on its own feet without any support.”
The Government of India also recently passed a bill that will utilize the Clean Environment Cess (India’s version of a carbon tax) collected on coal to finance the Goods and Services Tax (GST) Compensation Fund, a non-lapsable fund that will form part of the public account of India.