Solar gets Lower GST and clarity

22ndDecember 2018



Recommendations made during 31stMeeting of the GST Council held on 22ndDecember, 2018 (New Delhi)-Rate changes


GST Council in the 31stmeeting held on 22ndDecember, 2018 at New Delhi took following decisions relating to changes in GST rates on goods and services. The decisions of the GST Council have been presented in this note for easy understanding. The same would be given effect to through Gazette notifications/ circulars which shall have force of law.


  1. GST rate reduction on goods which were attracting GST rate of 28% :
  1. 28% to 18%
  • Pulleys, transmission shafts and cranks, gear boxes etc., falling under HS Code 8483
  • Monitors and TVs of upto screen size of 32 inches
  • Re-treaded or used pneumatic tyres of rubber;
  • Power banks of lithium ion batteries. Lithium ion batteries are already at 18%. This will bring parity in GST rate of power bank and lithium ion battery.
  • Digital cameras and video camera recorders
  • Video game consoles and other games and sports requisites falling under HS code 9504.
  1. 28% to 5%
  • Parts and accessories for the carriages for disabled persons
  1. GST rate reduction on other goods,-
  1. 18% to 12%
  • Cork roughly squared or debagged
  • Articles of natural cork
  • Agglomerated cork
  1. 18% to 5%
  • Marble rubble
  1. 12% to 5%
  • Natural cork
  • Walking Stick
  • Fly ash Blocks
  1. 12% to Nil:
  • Music Books
  1. 5% to Nil
  • Vegetables, (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container
  • Vegetable provisionally preserved (for example by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption.
  1. GST on solar power generating plant and other renewable energy plants
  • GST rate of 5% rate has been prescribed on renewable energy devices & parts for their manufacture (bio gas plant/solar power based devices, solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.
  • Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for solar power plant.
  • To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.


Reduction in GST rates/exemptions on services:


  • GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets upto Rs. 100 from 18% to 12%.
  • GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%
  • Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) shall be exempted.
  • Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services).



Posted in GST, Taxes | Tagged , , , , , , , | Leave a comment

Fresh blow for Indian PV with 18% GST rate verdict

The decision to tax the ‘service’ provided to solar developers at the full rate comes days after India’s Supreme Court upheld the federal government’s imposition of a 25% safeguarding duty on Chinese and Malaysian panels.

Hot on the heels of the recent Supreme Court ruling in favor of the 25% safeguarding duty on imported solar panels, India’s PV industry has suffered a fresh blow with the imposition of an 18% goods and services tax (GST) rate for solar projects.

The news prompted a swift response from the domestic PV industry, which has lobbied government to intervene and lower the tax burden, and has threatened lengthy legal action if the federal authorities stand firm.

Dismissing a demand from developers to be taxed at 5%, Maharashtra state’s appellate authority for advance ruling (MAAR) set 18% as the GST level for solar projects, following the example of its Rajasthan counterpart.

According to the ruling, though solar panels and related equipment attract GST at the concessional rate of only 5%, developers who employ contractors to supply panels and set up projects are receiving a ‘service’, and hence should pay the 18% applicable.

The Supreme Court had already ruled solar power plant would be considered immovable property and thus attract 18% tax under a ‘works contract’.

With the electricity generated by solar falling outside the purview of GST, the tax burden will be borne by developers and would inevitably be expected to filter through into tariff bids in PV auctions as a result.

Before India introduced GST, the solar sector enjoyed concessions for excise and customs as well as VAT. The 15% service tax was typically applicable on only around 10% of a project’s cost meaning, in effect, the net tax in the pre-GST regime was lower than 5%.

Source: PV Magazine

Posted in Government, India, News, PV, Renewables | Tagged , , , | Leave a comment

Drivers and Challenges for Rooftop Solar Loans toSmall and Medium Enterprises in India


Executive Summary

India needs to accelerate the growth of its rooftop solar sector. Of the 40 GW of rooftop solar installations targeted by 2022, the country has only achieved 2 GW to-date. This slow progress may hinder the country’s ability to reach its overall solar targets and meet its energy demand.

Presently in India, there are two dominant business models for rooftop solar: the capital expenditure (CAPEX) model, which has an approximate 75%
of market share, and the renewable energy supply company (RESCO) model, which accounts for 22%
of rooftop installations. These models work fine for larger commercial and industrial (C&I) players who have access to upfront capital, or can obtain commer- cial loans. However, rooftop solar remains constrained among smaller C&I players, micro, small and medium enterprises (MSME), and residential customers due to lack of financial resources and inability to access debt.

A CAPEX model with a commercial loan for the off- taker is a potential solution for these categories of cus- tomers. This model has proven effective with large scale implementation across Europe and the U.S.

This proposed model is similar to the existing the CAPEX model, where the customer makes the upfront payment to finance the solar assets. This payment
is, however, financed by a mix of the customer’s own equity and a commercial loan taken directly by the customer.

In this report, we assess the viability of the CAPEX loan model with a focus on the MSME sector, identify barriers to uptake, and recommended policy solutions to these barriers.

Through secondary research and interviews, we draw the following conclusions:

1. There are several factors that could lead to a significant demand for the CAPEX loan model. The barriers to the CAPEX cash (i.e., lack of capital)
and the RESCO model, such as lack of equity with smaller developers and difficulty in raising debt for MSMEs, are some of the factors that can encourage the uptake of the CAPEX loan model.

On the demand side, the model is primarily driven by a cost imperative as the installation cost of solar energy has decreased significantly and has become cheaper than procuring from the grid in most of Indian states.

While developers may find it difficult to raise funds for projects targeting MSMEs and unrated clients, the customers themselves can leverage their existing banking relationships to raise debt for solar installation. This is another major driver.

Customers can also take advantage of accelerated depreciation, offsetting their tax liabilities in the initial years.

  1. However, there are barriers and challenges that need to be addressed to expand the possible use of the model. The biggest barrier that the model faces for MSME clients is perceived lack of creditworthi- ness due to lack of credit information/ratings. This barrier is further aggravated by the high transaction cost/time of MSME rooftop loans due to their small size, decreasing their attractiveness to lenders. Lack of awareness on the part of MSMEs and perceived performance risk of solar generation are other important barriers that can limit the expansion of the model’s use.According to the lenders, MSMEs are often over-leveraged in terms of their borrowing, which makes it difficult for them to borrow for solar installations. MSMEs themselves may be unwilling to invest a sizeable portion of their capital (through equity or taking additional debt) in a non-core business activity that ties up capital for long periods of time.
  2. Market solutions could help overcome these barriers. We identify and prioritize policy solutions for key barriers in Table ES1, based on factors of potential impact and implementation feasibility. These solutions cater specifically to the top two barriers identified in the study. The other barriers, although important, need further research and discourse. CPI, through its future work, intends to continue to work and delve deeper to find potential solutions to these barriers.

There are also certain other policy solutions, like increasing the limit for net-metered solar plants and devising clear timelines for benefits, that could help create a more favorable environment for rooftop solar. Coupled with the solutions discussed above, these solu- tions could open more opportunities for solar uptake in the MSME sector.




  1. Introduction 6
    1. 1.1  Dominant business models in rooftop solar: CAPEX and RESCO 6
    2. 1.2  Challenges with existing models 7
  2. The CAPEX loan model: A potential solution to scale-up rooftop solar for Micro,
    Small and Medium Enterprises (MSMEs) in India 9

    1. 2.1  The CAPEX loan model 9
    2. 2.2  Advantages in comparison to the existing models 9
  3. Barriers to scale-up the CAPEX loan model 12
    1. 3.1  Lack of interest by the lenders 12
    2. 3.2  Lack of awareness among the MSMEs 13
    3. 3.3  Inability of MSME to absorb additional debt 13
    4. 3.4  Opportunity cost of the investment 13
  4. Solutions and policy recommendations 14
    1. 4.1  Challenge 1: Lack of interest by the lenders 14
    2. 4.2  Challenge 2: Lack of awareness among the MSMEs 18
    3. 4.3  Challenge 3 and 4: Inability to absorb additional debt and opportunity cost of the investment 18
    4. 4.4  Other recommendations 18
  5. Conclusion and way forward 19
  6. References 20
  7. Appendices 21
    1. 7.1  Appendix 1: Policy barriers 21
    2. 7.2  Appendix 2: Credit Guarantee Mechanism 21
    3. 7.3  Appendix 3: Financial analysis 22
Posted in India, Renewables, Rooftop, Solar | Tagged , , , , , , , | Leave a comment

Lowest solar power tariff bid at Gujarat Urja Vikas Nigam Limited

AHMEDABAD: Gujarat has equalled the record of fetching the lowest tariff for solar power in India. The reverse e-auction carried out on Monday by Gujarat Urja Vikas Nigam Limited (GUVNL) for 500 MW solar power capacity saw two power developers quoting a tariff of Rs 2.44 per unit.

This lowest tariff of Rs 2.44 per unit was first achieved in May 2017 through a 500 MW auction conducted by Solar Energy Corporation of India (SECI) for Bhadla Phase-III Solar Park in Rajasthan.

“The lowest tariff of Rs 2.44 per unit was reached in the bidding conducted today by GUVNL for 500 MW solar power. It is at par with the historic low solar tariff achieved in an auction last year for Bhadla solar park in Rajasthan,” said Pankaj Joshi, managing director, GUVNL.

Aditya Birla Renewables Ltd and Giriraj Renewables Private Ltd bagged contracts to supply 100 MW and 300 MW solar power respectively by quoting Rs 2.44 per unit. Azure Power India Private Ltd won 100 MW capacity for Rs 2.45/ unit.

These low tariffs assume importance as there were apprehensions of increase in solar power rates after the imposition of safeguard duty on solar cells and modules imported from China and Malaysia. Indian solar power developers heavily depend on imports for their projects.

In fact, GUVNL had to scrap the 500 MW tender in April last year as it found the tariffs quoted by successful bidders to be higher. Then, Kalathia Engineering had emerged as the lowest bidder with Rs 2.98 per unit rate.

The annulled tender was re-issued by GUVNL in June 2018 and 13 companies participated by placing bids aggregating 2,000 MW. Amid fears of rising solar power tariffs post imposition of safeguard duty, GUVNL had also raised the ceiling tariff to Rs 3 per unit from Rs 2.75 per unit.

“Despite higher cap, the lowest price has been achieved and this shows that there is still an appetite for providing solar power at affordable prices,” said a source close to the development. GUVNL had received the lowest bid of Rs 2.65 per unit when it auctioned 500 MW capacity in September last year.

Gujarat is also credited for discovering the lowest price of Rs 2.43 per unit for wind power through tariff-based auction, which was completed in December 2017.

Source: TOI
Posted in Crystalline, India, PV, Renewables | Tagged , , , , , , , , , , | Leave a comment

Supreme Court allows Safeguard Duty

The decision is an interim order issued by the Supreme Court, according to Bloomberg Quint. The next hearing is scheduled for October.

This major ruling puts an end to all uncertainty surrounding the 25% safeguard duty, recommended earlier this year by the Directorate of Trade Remedies (DGTR).

The two-year phased-duty was ratified by the Ministry of Finance on July 30. However, the order was later temporarily halted, after the Odisha High Court issued a stay order on the imposition of the duty until August 20, following a petition from Acme Solar Holdingsopposing it.

The new ruling of the Supreme Court nullifies the stay order.

With July 30, 2018, as the effective date of the duty imposition, the developers which had their solar module shipments released by providing bonds, will now have to pay the duties.

India’s import of cells has jumped from 1,275 MW in 2014-15, to 9,790 MW in 2017-18. Exports from China and Malaysia account for nearly 90% of the total inbound shipments to the country. India, meanwhile, produced 842 MW solar cells in 2017-18.

In its report, the DGTR concluded that the increased imports of solar cells in India have caused ‘serious injury’ and ‘threaten to cause serious injury’ to the domestic producers.

Source: PV Magazine

Posted in Anti Dumping Duty, Anti-Dumping, Cells & Modules, India, PV, Renewables, Solar | Tagged , , , , | Leave a comment

PI Berlin examines risks facing PV projects in India

Study finds that “the Indian market is a double-edged sword”

The Indian market is one of the most profitable yet risky for project developers and investors in photovoltaics (PV). While large-scale projects of over 100 megawatts (MW) are now common, the investment risks caused by the climate, poor installation and lack of proper maintenance is on the rise. In a study conducted on behalf of the National Metrology Institute of Germany (Physikalisch-Technische Bundesanstalt – PTB), PI Berlin has recently examined the most common risks facing Indian PV projects and how they can be avoided.

Six PV projects in India were investigated between 3rd and 14th July 2017 for the purposes of the study. The study was conducted with the support of the Ministry of New and Renewable Energy (MNRE), the Indian National Institute of Solar Energy (NISE) and the Solar Energy Corporation of India (SECI). The German KfW Development Bank helped select which projects to analyse and assisted PI Berlin in gaining access to them.


Posted in Cells & Modules, Crystalline, India, PV, Renewables, Solar, Solar PV, Thin Film | Tagged , , , , , , , , , , , | Leave a comment

Safeguard Duty Notified for Solar Cells imported into India from China PR and Malaysia

Updated: India’s Ministry of Finance has imposed a 25% safeguard duty on imports of solar cells and modules from Malaysia and the People’s Republic of China, starting tonight.

In keeping with the final recommendations proposed by the Directorate General of Trade Remedies (DGTR), the 25% duty will run for one year (from 30 July 2018 to 29 July 2019), then reduce to 20% for a six-month period (30 July 2019 to 29 January 2020), and to 15% for the final six-month period (30 January 2020 to 29 July 2020).

All levels of the duty will be imposed “ad valorem minus anti-dumping duty payable, if any” when imported during the relevant period, said the Gazette of India notification.

The notification stated: “Nothing contained in this notification shall apply to imports of subject goods from countries notified as developing countries vide notification No. 19/2016-Customs (N.T.) dated 5th February, 2016, except China PR, and Malaysia.”

Click here for the full notification

The Indian solar industry currently sources more than 90% of its cells and modules from China and Malaysia.

However, last week, major Indian PV developer Acme Solar received a stay order from the Orissa High Court regarding the imposition of the safeguard duty.

Chinese solar manufacturers still set to benefit from India’s safeguard duties

The Indian government imposition of 25% import duties on solar cells and modules from China and Malaysia to safeguard domestic manufacturers does not include solar cells and modules imported from Indonesia and Vietnam, due to being classified as ‘developing countries.’

Further checks have indicated that Thailand and Philippines would also be classified as developing countries and therefore excluded from the duties. This would assist companies such as leading ‘Silicon Module Super League’ (SMSL) member JinkoSolar, which has a major manufacturing operation in Thailand.

A number of Chinese PV manufacturers and other foreign suppliers have production operations in Indonesia and Vietnam, enabling them to supply solar products in India, without the import duty.

Leading integrated high-efficiency monocrystalline module manufacturer and ‘Silicon Module Super League’ (SMSL) member LONGi Green Energy Technology had already reignited previously suspended manufacturing plans in Andhra Pradesh, India.

LONGi is investing US$309 million, including around US$240 million in constructing a new facility with an initial nameplate capacity of 1,000MW of monocrystalline solar cells and expand its mothballed 500MW module assembly plant to 1GW.

Given the slim margins for suppliers into the Indian market, the exclusion from the safeguard duties could be a major competitive advantage over the next two years of the duties being imposed.

Further updates to follow.

Chinese PV manufacturers in Indonesia

Chinese and OEM PV manufacturers in Vietnam

Source: PV-Tech

Posted in Anti Dumping Duty, Anti-Dumping, Cells & Modules, China, India, Ministry of Finance, MNRE, Policy, PV, Solar | Tagged , , , , , , , , | Leave a comment