The Goods and Services Tax (GST) Council has approved a major relief measure for the renewable energy sector by reducing the tax rate on renewable energy equipment to 5%. The decision is expected to significantly cut capital costs for developers, lower electricity tariffs for consumers, and accelerate the adoption of clean energy across the country.
Industry experts note that taxation on equipment has been one of the factors adding to the financial burden of solar, wind, and hybrid projects. With the revised rate, project developers will now benefit from reduced upfront costs, making renewable energy more competitive compared to conventional power. This move is also likely to improve the financial viability of large-scale projects being undertaken by both public and private players.
For power distribution companies and enterprises, cheaper project costs will translate into more affordable renewable power purchase agreements (PPAs). Consumers are also expected to gain in the long run, as lower tariffs will encourage wider integration of clean power into the grid, helping India move closer to its renewable energy targets.
The Council’s decision comes at a time when India is stepping up efforts to expand its renewable capacity to meet its 500 GW non-fossil fuel target by 2030. By making clean energy projects more cost-effective, the GST cut is seen as a strong signal of policy support to developers, investors, and industries looking to transition to sustainable energy.
