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Know Tax Benefits on a Solar Panel Installation in India!

Solar panels installation is the technology trend of the decade. The electricity derived from clean green solar energy is being commercialized. In the present times, people are adopting renewable power at a rapid rate. India is also emerging as the powerhouse of renewable energy. India is making an effort to adopt a renewable source of energy. It is targeted that by the end of the year 2022 government has to achieve 175 GW of installed capacity of renewable energy. Of the target 100 GW is to be generated from solar panel installations. 

The best solar panels Installation Company in Mumbai is expected to work at their optimum capacity and yield desired results. To date, 23 GW of the target has been achieved and another 40 GW is in the under stages of the installation is under process. India is becoming the leader in the generation of solar energy.

Do you know that the mega-size of solar panel installation can generate up to 87% of the energy? This is the reason why the adoption rate of solar rooftop panels is accelerating like never before. During the years 2013 to 2016, the installed capacity of the solar rooftops increased from 117MW to 1250 MW. Therefore the Solar EPC companies need more encouragement in India. 

The Ministry of New and Renewable Energy through the National Solar Mission of India has the target of 40 GW power through rooftop solar by 2022. It is an ambitious project but definitely achievable. The government to achieve the dream is offering various tax-saving and other offers.

Tax benefits of solar panel installations are as follows:  

  1. Tax benefits: Direct and indirect tax benefits like sales tax safeguard or anti-dumping duty inclusions, excise duty exemptions, and custom duty exceptions are given. Project developers are exempted from Income Tax on all the project earnings from the project in the first ten years of its inception, operation, and accelerated depreciation (AD) for solar energy producers to claim 40% of the costs in the first year itself. 
  2. Net metering incentives and banking charges- the electricity generated from the solar panels is used for self-consumption with the net-metering approach. This system is instrumental in dual electricity flow. Here the customer gets the electricity bill supplied by DISCOMs. The gross metering term was introduced by the C&I sector, who were the first to resist and predict unsatisfactory economical prospects led to the clause of Banking Charges clause, the consumer is charged for net units stored in the grid infrastructure for later use. The net meeting policy is taken with immense pleasure and helps in the support of residential but C&I markets as well. The new clauses like banking charges are made to bring the Eco-system in a sustainable manner.
  3. Capital subsidies-Capital subsidies are promoted by the government to improve the residential rooftop installations in both rural and urban areas. The SRISTI scheme is known to work with the installation of solar panels at urban locations. These are the places with housing installations. The SUABHAGYA scheme targets solar rooftops installations in the rural residential areas where free electricity connection to all households irrespective of their APL and BPL status. 
  4. Assured Power Purchase Agreement (PPA)- PPAs are tri-party agreements that are signed between the investor, DISCOM, and regulatory authorities. The electricity generated from the solar rooftop is completely charged or fed by the grid at the regulated feed-in tariffs (Fit). State utilities guarantee the purchase of solar power through PPA which has a negative load and an intermittent energy source on regular basis. Thus the investors have used their unused lands to use by setting up solar power plants. 
  5. Renewable Energy Certificates (RECs)- RECs are tradable certificates that armeant to give benefits to the ones who generate green power by providing financial incentives for every unit that they generate. Central Electricity Regulatory Commission issues the REC which is mandatory for solar rooftop panel installation. It intends to provide advantages to the C&I sector to attain carbon neutrality.

It was always due to the constant efforts from the government in the form of tax benefits and other subsidies that solar panel installations have gained immense importance in the country. The production and use are also increasing due to constant promotion in the country. In India, the case is that there is 44.3 GW of installed solar power capacity which was only 1GW in mid-2000. Such policies and programs about awareness have brought these positive changes to the country. The growth rate is moving at the same pace in both the rural and urban areas.

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