SPDA Demands Uniform GST Rate of 5%

The total incidence of tax on the SPGS would increase to 8.9 per cent with implementation of the GST Council recommendations.

The recently issued sigh of relief from the GST council which recommended 5% GST for almost 70% of solar products has come under ire just a week after GST council issuing its recommendations.

The Solar Power Developer Association (SPDA) has written a letter to the Finance Minister Arun Jaitley demanding that the goods and service tax rate on solar power generating system (SPGS) be kept at a uniform 5%.

GST Council recommended that specified goods attracting 5% GST are supplied along with services of construction etc and other goods for solar power plant. In such cases the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate.

The remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.

The total incidence of tax on the SPGS would increase to 8.9 per cent with implementation of the GST Council recommendations which will be effective from January 1, 2019.

“…keeping in line with government endeavour to promote the renewable power sector and considering the specific facts of the solar sector, the entire contract for supply of SPGS should be taxed at the concessional rate of 5 per cent,” the SPDA said.

Elaborating further, the SPDA informed in the letter that in case of contract for supply of SPGS, the scope of work primarily includes supply of goods.

The letter said that, “It is pertinent to note that services are incidental to the contract and are minimal in the whole scope of work (not being more than 5 per cent of the total contract value).

It further noted that “For the purposes of clarification, we have in last 8 months provided the Ministry of Finance with all the necessary evidences including the cost break-up of every single part installed in SPGS and EPC contract documents executed in the industry.”

Source: PTI