Solar tariffs to rise by 10 per cent if tax exemptions curtailed in GST

Astudy released by the Council on Energy, Environment and Water (CEEW) states that solar tariffs would rise by 10 per cent if the current tax exemptions given to the solar sector were curtailed with the roll-out of the goods and services tax (GST). Further, according to the study, GST could increase the capital cost of a solar project by Rs 4.5 million per MW. This would add to the solar tariffs, thereby increasing O&M costs, panel costs and financing costs. The increase in solar tariffs would vary across states – higher for states such as Rajasthan where there are value added tax (VAT) and entry tax exemptions for solar equipment, as opposed to Andhra Pradesh and Gujarat where VAT and entry tax exemptions are not provided.