The Government of Telangana, in a budget release order, has authorized the release of ₹58.3 million (~$789,059) to two solar project developers as refunds under State Goods and Services Taxes (SGST) and Value Added Taxes (VAT).
The state has approved an amount of ₹26.072 million (~$352,847) payable to Pratamesh Solarfarms Limited, a subsidiary of ReNew Power. It also allowed the transfer of ₹32.23 million (~$436,212) to SE Solar Limited, a subsidiary of Suzlon Energy. Both companies are based at Wanaparthy in the district of Mahabubnagar, Telangana.
The companies had previously claimed SGST and VAT refunds as outlined in the Solar Power Policy, 2015, for setting up solar power projects in the state. The funds are to be transferred to the respective bank accounts of the companies.
In a previous budget release order issued on October 21, 2020, the state government had ordered for ₹58.3 million (~$789,059) to be issued to the companies to reimburse them for their VAT expenses by way of reappropriation in the relaxation of treasury control orders and quarterly regulation orders under the state’s Solar Energy Program.
Subsequently, the state government directed the assistant secretary to the government, Energy Department, Hyderabad, to draw and disburse the amount and credit it to the respective bank accounts of the companies.
In April, the Central Electricity Regulatory Commission declared that the introduction of Goods and Services Tax fell within the scope of the “Change in Law” clause for power purchase agreements. It stated that any additional costs borne by solar developers due to the imposition of GST were to be reimbursed.
Earlier, solar power developers aired their grievances about having to pay GST on Safeguard Duty (SGD) reimbursements. They said that it was unfair that solar power companies have to pay GST – a tax on the value of goods and services in India – on safeguard duty, a specific measure under trade remedies. In March, the Ministry of New and Renewable Energy released a circular stating that Goods and GST, and SGD compensation to solar project developers should be paid within 60 days.
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.