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Two months after the government slashed GST on solar modules from 12% to 5%, solar developers say the relief has been far more muted than expected, as the lower tax rate has restricted their ability to claim ITC, limiting real financial gains. Industry players mentioned that although the GST cut ma
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The GST on solar modules was reduced from 12% to 5%.
The lower GST rate restricts developers' ability to claim Input Tax Credit (ITC), which was fully utilisable under the previous 18% rate, thus limiting real financial gains.
The government maintains that ITC is still available through an inverted duty structure refund mechanism and is working to expedite processing.
The CERC declared the GST reduction as a 'Change in Law' under renewable energy PPAs, allowing developers to claim tariff adjustments or refunds for projects with invoices or payments dated after September 22, 2025.
Some developers, like ReNew, have publicly announced price reductions, effectively passing on the GST cost benefit to customers, though the exact quantum is not disclosed.
Developers emphasise the need for faster ITC refunds, better supply-chain alignment, and policy consistency, in addition to the GST cut, for substantial financial relief.
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