Government Should Remove Service Tax for the Installation & Commissioning of RE Projects: Vikram Solar

Keeping in mind the nature of the industry and to bestow more power generation capacity under the RE Sector, the Government should remove service tax for the installation & Commissioning

Gyanesh Chaudhary, CEO and Managing Director, Vikram Solar

Gyanesh Chaudhary, CEO and Managing Director, Vikram Solar in his budget expectation statement said keeping in mind the nature of the industry and to bestow more power generation capacity under the Renewable Energy (RE) Sector, the Government should remove service tax for the installation & Commissioning of Renewable Energy projects.

Chaudhary said “Currently, the Government provides a subsidy of 30% on rooftop installations. In order to make rooftop projects more attractive, this subsidy should be increased to 50%. This will increase uptake of rooftop solar capacity and hence, help the Government achieve its overall target of 100 GW solar installations by 2022. Also, in case the Government find it unfeasible to increase the subsidy, it may be provisioned that investment in rooftop solar by an individual is allowed to get a deduction of INR 2,00,000 under section 80C of the Income Tax Act.”

According to him current 10 years tax holiday should be extended for another 10 years. “This is crucial keeping in mind that the setting up of any new industrial project inevitably takes a huge amount of time,” he said.

Chaudhary requested the Government in his budget expectation statement to completely lift excise duties with regards to machinery, equipment, spare parts etc deployed in a regular factory set up, meant for solar energy production projects. Additionally, full exemption from excise for raw materials required for manufacturing Solar Modules such as, tempered glass, back sheet, EVA Sheet, solar cells, flat copper wire which are needed for making PV Ribbons etc. The same should be applicable for GST.

He recommended that all the benefits and exemptions currently applicable to SEZ units, should continue to exist.

“Energy or electricity produced is currently outside the domain of GST and thus, input GST would inevitable result in higher cost of power. We would like to recommend to the Government to levy 100% exempt or zero rated projects to all input services that are provided to the power sector. All the inputs used for installation & operations of power plants should have zero GST Rates,” said Chaudhary. He further added “The Government should also look at exempting import duties on components and equipment that are required for establishing solar power plants, with the roll out of GST.”

 To promote the indigenous solar industry, Vikram Solar suggests introduction of more and more incentive schemes and overall reforms. The “Technology Up-gradation Fund”, like in the textiles industry should be introduced in the solar sector as well. The Government should also provide interest subsidies for the solar industry.

“Favorable policy reforms will not only catapult the Government’s Make in India program but also will be a step towards realizing the Government’s target of electrifying the whole of India by 2020, ” Gyanesh Chaudhary, CEO and Managing Director at Vikram Solar.