Impact Of GST On Solar Sector


Impact Of GST On Solar Sector

Abhinav Mahajan IB Solar

Abhinav Mahajan, IB Solar

The GST structure on solar industry lacks clarity which is delaying the project execution and has slowed the market drastically since its introduction on July 1st. We find that Government has not considered any difficulties and confusion prevailing in some other all segments of Solar Industries. Let us highlight below the problems we face in small off grid power plants and Retail Marketing, after that we will highlight the problems we are facing in Module Manufacturing.

a) Solar Power Generating System

Purely DC Power supply based on Solar Energy which includes

1) Solar Panels GST@5%

2) Solar Battery GST @ 28%

3) Solar Charge Controller GST @ 18%

4) Cables for Connection GST @ 28%.

We are getting from customer GST @ 5% and paying at the rate of 18% and 28%, how to get refund from department, till what time will our capital be blocked, Are there any talks for making components of the System also at GST @5%. These are some of the burning questions that need to be addressed. Similarly,

b) Solar Power Generating System-

Off grid Solar Inverter which includes

1) Solar Modules @ 5%

2) Solar Battery @ 28%

3) Inverter @ 12i

4) Cables @ 28%

c) Solar Street Light System -

1) Solar Street Lamp @ 5%

2)Street Light LED Type @ 12%

3) Solar Battery @ 28%

4)Cables @ 28%

In all the above 3 cases, as a manufacturer of Solar Modules, we are charging final GST of 5% and have a big amount which is due for refund. It is not easy to get refund from Govt Officials.As given in Chapter heading 84 or 85, all components/spares of Solar Power Generating System should be at 5% GST, We need some kind of paper work so that components required to supply the above system are available at 5% Per GST as per Chapter Heading. Similarly, same problem lies with Module Manufacturers. As per Govt Solar Module is to be sold at 5% GST under heading 84 or 85, but raw materials for the same attract very high GST, namely

1) Silicon Sealant GST @ 28%

2) Solar Glass GST @ 28%

3) Aluminum Frame GST @ 18%

4) Ribbon GST @ 18%

5) EVA, Backsheet @ 18%.

6) Junction Box @ 18%

As you can see, we as a  module manufacturer is also paying higher amount of GST while procuring raw materials while getting only 5% from the customer.

The above scenario is very troublesome for the future of the Indian Solar Module Manufacturing Industry and this matter needs to be taken with the Government.

Further we should take up with Govt to use Made in India Solar  Modules,so that local manufacturers are able to sell panels in India , as such Make In India scheme is turning out to be failure with over 90% share of the installed capacity is of Foreign Solar Modules.


Soumyen Mukherjee President Sova Solar Ltd.

The move to start a new regime is always very appreciable. Imposition of GST is expected to be a good move for our country. The nation was running by a parallel economy which didn't contribute directly to the growth of the country. With the compulsory imposition of GST it is expected that parallel economy will come under the same umbrella of the country. 

The Solar industry may face some initial hindrances, like other industry, but in long run it will definitely enjoy the benefits of GST. With the help of instilling more liquid funds into the economy the purchasing capacity of mass will be increased. GST will not be a cost to registered retailers therefore there will be no hidden taxes and and the cost of doing business will be lower.Benefit to  people to that, as prices will come down which in turn will help companies as consumption will increase.  Once this flow will become smooth, like other industry Solar Industry will also enjoy the benefits.

In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services.GST will be levied only at the final destination of consumption based on VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market, which ultimately help the total economy and Solar Industry is not out of the economy .Moreover, GST will also help to build a transparent and corruption free tax administration.

pg 20 Insolation

Mr. Manish Gupta Director Insolation Energy pvt ltd.

“The new GST rate of 5 per cent will have a marginal impact on manufacturing and maintenance of solar equipment and projects. “There is expected to be a 4-5 per cent rise in project cost after the GST. That would not mean a significant impact in the per unit cost. The new rate will also impact tariff by around 15-20 paise. I think the viability of solar in the Indian context will remain. If it were a lower GST rate, then that would have been an added incentive but at an overall level I do not think it will make a difference in the long run. Those who have recently bid aggressively assuming that prices of modules or panels will have a lower rate will face slight problem for the transitionary period but I think over time the price economics will adapt to the new regime”

vivek Chaturvedi

Vivek Chaturvedi, Regional Director – Solar, DSM India, Middle East and Africa:

“Reduction of complexities goes a long way in reducing costs. That being the driving force in PV industry to make in independent of grants and subsidies, GST will go a long way in addressing this need, when the dust settles. As things become simpler it will bring down the layers/channels between suppliers and customers, which in turn again results in lowering of costs and speeding up execution. This will be key to mass adoption of rooftop solar in residential/commercial segment.

DSM is developing materials targeted at bringing down levelized costs of energy resulting in interesting price-performance ratio in PV modules for rooftop segment and is positive about impact of GST on solar industry in India.”




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