The Power Division has stated that there is currently no fixed tax on solar energy in the country. Contrary to recent media reports, neither the Central Power Purchasing Agency (CPPA) nor the Power Division has proposed any summary to the government to impose taxes on solar energy.
A notification from the Power Division outlines the 2017 Net Metering Policy, which was designed to promote investment in renewable energy sources like solar power. Since its implementation, the policy has spurred significant growth in solar panel installations, particularly among wealthier individuals, indicating an increasing shift towards solar energy use.
However, the government is currently providing subsidies to both residential and industrial consumers, resulting in a financial burden on the national treasury of Rs1.90 per unit due to these subsidies. The Power Division noted that 25 to 30 million economically disadvantaged consumers are adversely affected by this burden.
Given the surge in solarization, the Power Division pointed out the need for careful monitoring to ensure the sustainability and long-term effectiveness of solar energy policies. It underscored the potential need to adjust tariffs and regulations to accommodate the rapid increase in solar energy adoption.
The notification from the Power Division comes amid reports suggesting that the CPPA had recommended a tax on domestic and commercial solar panel installations to the Ministry of Power. These reports claimed that a tax of Rs2,000 per kilowatt would be levied on those installing solar panels, with a projected collection of Rs24,000 from a 12-kilowatt solar panel grid.
However, the Power Division’s recent statement contradicts these reports, emphasizing that no formal proposal for a solar energy tax has been put forward. It reiterated the importance of reevaluating existing policies and regulations to foster and sustain solar energy growth. Additionally, the Power Division affirmed its commitment to monitoring the solarization process to ensure that any future adjustments are informed by the sector’s developments.
