Home Featured Vikram Solar: Budget expectations for FY 2017-18
Vikram Solar: Budget expectations for FY 2017-18

Vikram Solar: Budget expectations for FY 2017-18

92
0

It won’t be wrong to assume that green or renewable energy is the veritable catchword for the Modi-led Government in 2017, as it gears up to achieve 175 GW of clean energy by 2022, 100 GW of the same being in Solar Energy. It is evident from such ambitious targets that the Government is bullishly trying to establish India as a vital player in the renewable energy domain by 2022. Our country undoubtedly has a tremendous solar energy potential and considering the fact that – energy demand and supply gap is rampant across the country, it is but a natural progression to tap into solar power in order to satiate the glaring energy needs. Environmental sustainability is another harrowing concern. Apart from providing tax rebates to individual customers and end-users in order to encourage them to switch to solar power backup systems, the Government should also extend special concessions and benefits to individuals who are making a conscious attempt to go solar in order to meet their specific energy needs.

Considering the rising demand and sporadic supply of coal and petroleum based fuels, the Government of India had already underscored the paramount role it expects the solar industry to play in the country’s rapid growth. The need of the hour is to drive innovation and incorporate some key policy reforms in order to make the industry flourish in the long run. As the Union Budget 2017-18, is approaching, we want to put forth some of our expectations, which we hope the Governmentwill take into consideration while formulating the same: Excise Duty: We expect that, complete exemption from excise duty is granted with respect to machinery, equipment, spare parts, consumed within a typical factory, etc., that are required for setting up of solar energy equipment manufacturing capacities. Also, full exemption from excise for various raw materials used for building Solar Modules, namely; tempered glass, back sheet, EVA Sheet, solar cells, flat copper wire, that are used in the manufacturing of PV Ribbons, etc. The same should also be applicable for GST, as and when it is rolled out.

We also expect the Government to consider the exemption from excise duties and concessions on import duties on components and equipment that are required to set up solar power plants, with the roll out of the much awaited GST. Service Tax: With respect to Service taxes, considering the nature of the Industry and to bring in more power generation capacity under the Renewable Energy Sector, Service Tax should be fully exempt for installation and commissioning of Renewable Energy projects.  Income Tax: Tax Holiday should be extended for yet another 10 years. We also think that the 10 Years Tax Holiday should be increased for a longer period, because setting up and establishing any new industrial project inevitably takes considerable amount of time. Additionally, setting up an industry for the benefit of section 80IA can only happen when the clarity for its existence be present.

The Government should also consider reintroducing the “Investment Allowance” @15% of investment in new plant and machinery (as per section 32AC)as it stands to be discontinued from FY 2017-18. Accelerated Depreciation: In solar projects, accelerated depreciation is widely used as an incentive to lessen the burden of tax. We are hopeful that the 80% accelerated depreciation benefit, which has been withdrawn w.e.f. April 2017,will be reinstated. GST: GST has been on the anvil for quite some time now. The model GST law does not provide clarity regarding the prevalence of exemptions and benefits on SEZ units. We expect that all the benefits and exemptions currently applicable to SEZ units, should continue. Energy or electricity produced is outside the purview of GST and therefore, the input GST would cause a considerable hike in the cost of power. We therefore recommend that, input services that are provided to the power sector should be 100% exempt or zero rated. As such, all the inputs used for installation & operations of power plants should have nil GST Rates. This should also be applicable for the units that are supplying the goods and services to Power Plants.

Incentives: In order to promote the domestic Solar Industry more firmly, we believe that the Indian Governmentshould launch more and more incentive schemes and overall reforms in terms of policies. Also, “Technology Up-gradation Fund”, like in the textiles industry should be introduced in the solar sector. This should be part of project funding for solar manufacturers under R&D head. Similarly, like textiles, the Government should also provide interest subsidies for the solar industry. Subsidy: Currently, the Government providesa subsidy of 30% on rooftop installations. In order to make rooftop projects more attractive, this subsidy should be increased to 50%. This will increase uptake of rooftop solar capacity and hence, help the Government achieve its overall target of 100 GW solar installations by 2022. Also, in case the Government find it unfeasible to increase the subsidy, it may be provisioned that investment in rooftop solar by an individual is allowed to get a deduction of INR 2,00,000 under section 80C of the Income Tax Act.

Bank Loans: Moreover, those individuals who would install rooftop solar plants, should be allowed to take bank loans for the same at concessional interest rates of 4% – 5%. The promotion of solar industry will have multi-faceted implications and benefits in the long run. It would not only give a push to the Government’s Make in India program, but also the development of indigenous green energy production, and further prove to be a step forward in realizing the Government’s target of electrifying the entire nation by 2020.

Anand Gupta Editor - EQ Int'l Media Network

LEAVE YOUR COMMENT

Your email address will not be published. Required fields are marked *

Open chat