After waiting for months for clarity on Goods and Services Tax (GST) rates, the GST Council has now given its recommendations on solar power generating projects and other renewable energy projects. These recommendations will become law after gazette notifications.
The GST Council has recommended that where a solar power generating system (under chapter 84, 85 or 94 of the tariff) attracting 5 percent GST is supplied with services of construction, then in all such cases:
“70 percent of the gross value will be deemed as the value of supply of said goods attracting 5 percent rate and the remaining portion, 30 percent, of the aggregate value of such EPC contract will be deemed as the value of supply of taxable service attracting standard GST rate.”
Earlier contrasting state commission rulings regarding GST were creating confusion and uncertainty in the solar market.
Though it was clear in law that solar power generating system will attract 5 percent GST, what created the main confusion was that solar power generating systems are procured in various contracting structures. For example, composite turn-key supply or segregated supply and services.
Commenting on the GST recommendations, a Solar Project Developers Association (SPDA) spokesperson said, “The way the clarification has come, it has increased the effective rate of GST from 5 percent to 8-9 percent, which is not really favorable for the industry. ”
This is a PIB News-Feed edited by Clean-Future Team