Home India Here is what India’s largest power sector foreign investor has to say on GST
Here is what India’s largest power sector foreign investor has to say on GST

Here is what India’s largest power sector foreign investor has to say on GST

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New Delhi: CLP India, the largest foreign direct investor in the country’s power sector new rates under the Goods and Services Tax will not have a major impact on power sector in the as the current scenario does not change much even after the implementation of the new tax regime.

“As a concept, there is not much of change as compared to the current scenario, where power is exempt from excise duty and hence no input tax credit is available,” Amarthaluru Subba Rao, Executive Director – Finance and Strategy, CLP India said.

CLP India is the largest foreign investor in the Indian power sector, with a total investment of more than Rs 14,500 crores, which is spread across renewable energy, supercritical coal, and gas-fired generation. With more than 1,000 MW of committed renewable power projects, CLP India is one of the largest investor in India’s renewable power sector.

He said power is not subject to GST. Hence, GST paid on fuel and equipment is not available for input tax credit. “Coal is mostly a pass through cost for most power plants in India. Hence, reduction of duty on coal will make the coal less expensive for discoms,” Rao said. Coal has been kept at the lowest tax slab of 5 per cent under the GST rates while solar panels have will attract a rate of 18 per cent. He added that it is for discoms to decide whether to pass on this benefit to consumers. They may not pass on the benefit of lower coal cost to consumers in view of their current losses.

On solar sector, Rao said more than 90 per cent of solar equipment used in India is currently imported, which is duty free. There could be import duty on par with GST on imported solar panels after implementation of GST.

“If solar panels become more expensive as compared to the current scenario, the developers will have to bid a higher tariff to recover higher cost. Existing tariffs for projects bid-concluded projects will remain unaltered. Where developers have already concluded their bids, but fail to import before GST onset date, may not be able recover additional cost of panels /equipment on account of GST/import duty,” he said.

On impact on the company itself, CLP India said there is no material impact of GST on it. “We will have to pay GST at higher rate on services than we are currently paying. Otherwise, what is said above for industry is applicable to us for coal and equipment,” the official said. It further said there are no pending project imports and hence the company will not have any adverse impact on account of possible higher cost of project imports.

Source:ET
Anand Gupta Editor - EQ Int'l Media Network

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