India’s Goods and Services Tax (GST) rates for solar components have been finalized, says consultancy Mercom Capital Group, with GST rates expected to be 18 percent or more for some solar components and services. Solar modules will get a rate of 5 percent rate. However, government agencies still seem unsure about how the ratio of goods to services will be calculated, according to Mercom.

As reported, project developers have been worried about the increase in project costs due to the expected increase the GST will cause in operations and maintenance (O&M), component, and civil and work contract costs. This uncertainty surrounding actual GST rates for various solar components and services is a big concern for solar companies and state agencies and has caused a freeze in tender and auction activity and delays in new project activity.

An official from the Ministry of New and Renewable Energy (MNRE) related to research and development acknowledged the confusion to Mercom, saying »the MNRE is soon going to conduct a workshop where all officers will be educated about the effects of GST on various components utilized in the renewable energy sector as there is confusion regarding the various tax slabs and the goods registered therein.

For certain imports, developers might even have to pay IGST (International GST) and now a tax on services at the rate of 18 percent will be applicable.