Rooftop solar projects CFA to be calculated as per revised GST rates

The Ministry of New and Renewable Energy (MNRE) told the media that the Central Financial Assistance (CFA) for rooftop solar projects would be calculated as per the revised Goods and Services Tax (GST), excluding the GST rates.

According to MNRE, the old GST rates will be valid for invoices raised before 1 October 2021. To calculate CFA, the GST will be added to the benchmark or the tender value.

Previously, MNRE reduced the benchmark costs for grid-connected rooftop solar projects for 2021-22, excluding the GST. The new benchmark costs range from Rs 35.89 per W to Rs 46.92 per W, while earlier, the range was Rs 39.08 per W to Rs 51.1 per W.

MNRE told the media that after the revision of GST rates for renewables, it decided to revise the benchmark costs, excluding the GST rates.

MNRE said that the state implementation agencies should submit a separate list of systems with the new GST rate and the invoices while claiming CFA. They must also submit a declaration that the documents have been checked to the revised GST.

Earlier this year, the GST council said that for specific renewable energy equipment, the GST rate would be increased to 12% from 5%.

The rise in GST rate is a challenge for the project developers as it will impact the project cost. Some solar developers said that the increased GST rate would make many renewable energy projects unviable.

For the past six months, solar developers have faced challenges due to increased prices of solar modules and metals. Increased GST is also a challenge for them as the renewable energy sector has started to recover from the distress of the second wave of the Covid-19 pandemic.

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