People planning to install a solar plant at home or for their business may soon have reason to celebrate. The government is preparing to cut taxes linked to renewable energy equipment and services, a move that could make solar installations noticeably cheaper in the coming months.
What the GST Council may decide in October
According to news reports, the GST Council is considering a major tax relief on Engineering, Procurement and Construction, or EPC, contracts tied to renewable energy at its meeting scheduled for October. The proposal reportedly involves a direct cut of 4 percent in the existing tax rate on such contracts. If the Council approves this, the construction and installation costs involved in setting up a solar plant would see a direct reduction.
Why this tax cut is being considered necessary
A large chunk of the total cost of a solar plant comes from the EPC contract itself, covering engineering, procurement and construction work, and the tax charged on this component is what makes plants expensive. Since the government's aim is to promote renewable energy, cutting tax on this major cost head is seen as a way to make solar power more attractive to both individuals and companies.
Several solar schemes are already underway
This move comes at a time when multiple solar initiatives are already running across the country. Reports indicate that the Delhi government has announced free solar plants for households consuming up to 400 units of electricity, while nearly 2,000 homes in Bihar are also set to get solar panels. Under the PM Surya Ghar Yojana, free rooftop solar panels continue to be installed in households, and a new floating solar plant is being built over water in Umaria, Madhya Pradesh. The possible GST cut is being seen as the next step in this broader renewable energy push.
How ordinary people and businesses stand to gain
If this tax cut is implemented, the cost of installing a solar plant at a home, shop, factory or any institution would come down. This would lower the upfront investment needed, encourage more people to switch to solar power sooner, and lead to long-term savings on electricity bills.
