Govt clarifies tax on solar power equipment, parts at 5%

New Delhi: India will levy a 5 percent tax on all equipment required for generating solar power compared with nil duty now, a government official clarified, putting an end to confusion about the new taxation policy for the industry after its landmark tax reform.

“All solar equipments and its parts would attract 5 percent GST only,” Revenue Secretary Hasmukh Adhia said in a tweet on Sunday, contrary to the initially planned two tax slabs of 5 percent and 18 percent.

India, the world`s third biggest greenhouse gas emitter, has set a target to produce 100 gigawatts of solar power in five years to fuel its economic expansion while reducing its carbon footprint.

A flat 5 percent tax on all solar power equipment will put the sector on par with domestic coal from July 1 and make solar energy generation more expensive.

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