The Telangana Government has approved a payment of ₹73.76 million ($1 million) to three solar developers towards refund of State Goods & Services Tax/Value Added Tax (SGST/VAT) on inputs used for developing solar projects under the Telangana State Solar Power Policy, 2015.

The three companies are – Neo Solren, Winsol Solar Fields (Polepally), and Arun Vidyuth. Neo Solren is a special purpose vehicle (SPV) promoted by the Mahindra Group to set up a 42MW solar project at Warangal District, Telangana. The plant is operational since October 2017. This SPV was in the news earlier as Mahindra was planning to sell its stake to CLP India. The acquisition was later terminated.

Winsol Solar Fields operates a 75 MW solar project across three locations in the Mahabubnagar and Ranga Reddy districts of Telangana. It is 100% held by Vector Green Energy, an independent power producer. The 75 MW capacity has been in operation since December 2016.

Arun Vidyuth operates a 5 MW solar project in the Mahabubnagar district of Telangana. The project commenced operations in March 2016.

The Telangana government had earlier approved the release of ₹400.19 million (~$5.48 million) to Mytrah Agriya Power and six other solar developers toward SGST and VAT refund.

Back in December 2020, the state government, in a budget release order, had authorized the release of ₹58.3 million (~$789,059) to two solar project developers as refunds under SGST and 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 Suzlon Energy subsidiary.

The refunds to solar developers against SGST and VAT come on the heels of the Central Electricity Regulatory Commission declaring that the introduction of GST to be falling within the scope of the ‘Change in Law’ clause for power purchase agreements. According to the clause, any additional costs borne by solar developers due to the imposition of GST are to be reimbursed.

Solar developers across various states are facing delays in reimbursements. To address the issue, the Ministry of New and Renewable Energy has ruled that GST compensation to solar project developers should be paid within 60 days from the date of submission of claims.

Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.