Indian tax overhaul likely to raise renewable energy prices by up to 16%
Under India’s new Goods and Services Tax (GST) law, tax exemptions on renewable energy development will be scrapped, while renewable energy imports will now be subjected to taxes. Taxes on photovoltaic solar cells are expected to increase by 12-16%, with taxes for wind and biomass imports to increase by 11-15%. The country’s energy ministry is expected to urge the government to make renewable energy exempt from this new GST legislation or to reduce taxes on renewable products. Experts say that GST should not have a lasting impact on renewable energy, however, as equipment prices continue to fall.

In the last couple of years, the renewable energy industry has boomed. Part of this success has been spurred by tax breaks and other incentives provided by the government.

Between 2009 and 2015, solar prices dropped by 75 percent according to the Delhi government. Changes like these brought in a flood of investments.

But under the GST bill, the tax exemptions that fuelled renewable energy development would be done away with. Solar panels that were imported without taxes will now be taxed, said Jasmeet Khurana, associate director of Bridge to India, a consulting firm that analyses renewable energy policy.