MNRE Clarifies GST on Renewable Devices & BCD on Imports

The Ministry of New and Renewable Energy has issued Circular Vibe F.No 283/3/2018 GRID Solar Part dated September 27, 2022 clarified that the increase in rate of GST on renewable energy devices from 5% to 12% w.e of October 1, 2021 and imposton of Basic customs duty BCD on cells at 25% and modules at 40% w.ef April 1, 2022 would be treated as change in Law.

The renewable energy developers have represented to MNRE for treating the above two events as a change in law.

The matter has been examined in MNRE, and MNRE’s renewable energy implementing agencies,s SECI/NTPC Ltd./NHPC Ltd., are hereby requested to:

BCD imposition as a change in law: w.r.t solar PV/ solar PV wind hybrid power projects wherein the last date of bid submission was on or before annoucement in march 9, 2021. Regardin imposition of basic customs duty on the import of solar PV cells and modules with effect from April 1, 2022, and wherein in the schedule commissioning date, including time extensions granted, if any, was on or after April 1, 2022, REIAS may consider imposition of BCD on import of solar PV cells and modules with effect from April 1, 2022 under ‘Change-in-Law’ unless the same is disallowed by specific provisions in the tender documents/ contracts.

Hike in GST rate as a change in law: W.r.t RE power projects, wherein the last date of the submission was on or before September 30, 2021, i.e., on or before the top of the form from the issuance of notification regarding increase in GST rate for specified renewable energy devices and parts for their manufacture from 5%to 12%, and wherein the Scheduled Commissioning Date (SCD), including time extensions granted, if any, was on or after October 1, 2021, REIAS may consider this hike in GST rate from 5% to 12% under ‘Change-in-Law’ unless the same is disallowed by specific provisions in the tender documents/ contracts.

What is a Change in Law?

Change in law means the occurrence after the date of this agreement of any of the following:

The adoption or taking effect of any law, rule, regulation or treaty.

Any change in the law, rule, regulation, treaty or in the administration interpretation, implementation or application thereof by any Governmental Authority or

The market or insurance of any request, rule guidance or directive (whether or not having the force of law) by any Governmental Authority; provided that, notwithstanding anything herein to the contrary.

‍Suggested Read: GST Applicability on Import of Goods Made Easy

EG: If there is a change in law that renders this agreement unenforceable or illegal, then either party or company may terminate the agreement without the consent of, and upon thirty days noticr to the other party, notice to the other party without any obligation, payment or otherwise.

In the above case, the imposition of a safeguard duty on the import of solar cells and modules pursuant to the safeguard duty notification would qualify as a change in law in terms of the PPA.

BCD Imposition and Hike in GST as a Change in Law

In cases where the last date for the submission of this was on or before 9 March 2021, the order of BCD will come into force on 1 April 2022, and where the planned commissioning date SCD is after any extension granted, will be on or after 1 April 2022. REIS may come into force with effect from 2021 April in accordance with the amendments to the law. Unless otherwise prohibited by a specific provision in the competition basis. Contacts.

Conclusion

The GST rate on renewable energy in India, Effective from September 22, 2025, will reduce project costs and promote the use of clean energy. Utility-scale solar projects will generate significant savings, benefiting households, farmers and industries through cheaper electricity,

Suggested Read: GST on Liquidated Damages

FAQS

Will GST reduce energy costs?

The reduced GST is expected to lower levelised renewable tariffs, easing the financial burden of electricity procurement for distribution companies (DISCOMs). This could translate into nationwide annual savings of Rs. 2,000-3,000 crore in power procurement costs. "The reform will make rooftop solar systems more affordable for households.

When will the revised GST rates come into effect?

The revised GST rate will come into effect from 22nd September 2025, the decision is targeted to directly benefit consumer farmenrs developer and manufacturers.

What is the rate of GST applicable to renewable energy devices?

MNRE has clarified further:

Most of the solar devices, such as solar panels, , and their constituents, are liable for a tax of 5% GST, but services such as EPC will be liable for a tax of 12% GST, depending on the service model.

What is BCD, and what impact does it have on the importation of renewable energy devices?

Basic customers' duty is a kind of important tax on important goods and services. For renewable energy components such as solar modules and cells, basic customs duty is imposed to cut down import reliance and promote local production.

Are GST and BCD both applicable to imported renewable devices?

Yes, BCD is applied to the customers while GST is charged on the cost price, including BCD.

Featured Posts

GST on Educational Institutions: Taxation Rules & Exemptions Explained

GST Rates and HSN Code 6203 for Boys' Suits

GST Rates & HSN Code for Rubberised Textile Fabrics

GST Rates and HSN Code 9008 for Other Image Projectors

Key Functions of Insurance: Understanding Its Importance in Modern Life

GSTR-9 Annual Return: Due Date, Applicability, Eligibility & Rules

DRC in GST Full Form: Demand and Recovery Code in GST

Section 48 of CGST: Role of GST Practitioner

Featured Posts

Looking for a billing software?

Quick Links

Learn More

Testimonials