Tax Cut Makes Renewable Installations More Affordable
GST on renewable devices cut to 5%.
GST Council, in its 56th meeting on Wednesday, September 3, 2025, slashed the Goods and Services Tax (GST) on renewable energy devices and parts from 12% to 5%, effective September 22. Announced in New Delhi, this decision aims to reduce the cost of clean energy project installations, paving the way for accelerated adoption of sustainable power solutions and supporting India’s goal of achieving 500 GW of non-fossil fuel capacity by 2030.
The tax reduction covers a wide range of renewable energy equipment, including photovoltaic cells, solar power-based devices, solar cookers, solar water heaters, windmills, wind-operated electricity generators, biogas plants, waste-to-energy devices, and ocean wave/tidal energy systems. The Ministry of Finance stated that the move addresses the inverted duty structure, with refund mechanisms available to mitigate financial impacts. Fuel cell motor vehicles, including hydrogen-based vehicles, also benefit from the reduced 5% GST rate, further promoting green mobility.
Industry leaders hailed the reform as a game-changer. Rohit Chandra, CEO of OMC Power, described it as a step toward “inclusive growth and sustainable energy solutions.” Amit Paithankar of Waaree Energies noted that lower project costs will accelerate capacity addition, while Ratul Puri of Hindustan Power emphasized enhanced operational ease across the value chain. Vinay Rustagi of Premier Energies predicted a surge in consumer demand, and Ishver Dholakiya of Goldi Solar highlighted increased financial viability attracting investments. Akshay Hiranandani of Serentica Renewables added that competitive tariffs in auctions will benefit consumers directly.
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The reform also includes a GST hike on coal from 5% to 18%, which Amit Rautela of Meja Urja Nigam described as a structural adjustment with minimal impact on thermal generators due to the merger of the previous compensation cess. Simarpreet Singh of Hartek Group called the GST rationalization a catalyst for private participation, while Srivatsan Iyer of Hero Future Energies praised its alignment with India’s 2070 net-zero vision, foreseeing enhanced competitiveness, energy independence, and green job creation.
As India pushes toward a sustainable future, these tax cuts signal robust government support, promising cheaper clean energy installations and a stronger renewable energy ecosystem.
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