The GST will increase the costs, and therefore the tariffs, of renewable energy, industry experts say. The wind power sector today enjoys incentives such as concessional excise and customs duties. If the GST rate is around 18 per cent, the additional tax incidence will be around 12 per cent, says OP Taneja, Associate Director, Indian Wind Turbine Manufacturers Association. This will, in turn, push the cost of wind projects, he says.
The Association sees 18 per cent GST on inputs and zero rate on output as “the ideal situation” for the wind power industry. In this case, the taxes paid on components will be refunded to the manufacturers by the government. The solar sector is also concerned. “Today, there is zero tax on solar panels, but now (with GST) the total project cost may go up and result in a 10-12-per cent hike in tariff in the upcoming bids,” says Sunil Rathi, Director, Waaree Energies, a solar module manufacturer and a solar EPC company.