A study by the Council on Energy, Environment and Water (CEEW) and the International Institute for Sustainable Development (IISD) said that GST has led to an increase in the cost of solar photovoltaic (PV) power generation by almost 6 per cent while it has resulted in a decline in the cost of thermal power generation by 1.6 per cent.
Abhinav Soman, CEEW Programme Associate and study lead author, said that the uncertainty surrounding the GST rates for various solar PV contracting structures and the imposition of safeguard duty may constrain India’s progress toward its ambitious target of 100 GW (gigawatt) of installed solar capacity through delayed investments and it is important for policymakers to evaluate such impacts and their influence on our choices of energy sources.
Neil McCulloch, IISD Associate and co-author of the study, said that the GST Council recently clarified that 70 per cent of the solar PV contract value will attract 5 per cent GST while the remaining 30 per cent will be treated as ‘supply of services’ and attract 18 per cent GST. However, services constitute a much smaller share of the contract value than 30 per cent for most of India’s recent projects and a higher tax burden is being unfairly imposed.
The study follows an assessment of India’s energy subsidies by IISD and CEEW in late 2018 and  found that the GST has overhauled a large share of India’s taxes and the tax-related subsidies.
