A cloud hangs over VAT exemption for solar power

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Residents who install solar power systems on their rooftops may not get the benefit of VAT exemption as promised by the Delhi government earlier. According to sources, the VAT department has taken strong objection to the exemption promised under the draft Solar Policy and has refused to allow the same.Offering a host of concessions, the Delhi Solar Policy, which is currently being reviewed by Chief Minister Arvind Kejriwal, was to provide exemption from VAT and entry tax on all solar panels, inverters, energy meters, and other devices purchased for installation of solar plants in Delhi.“The VAT department has not approved of the exemption stating that it would lead to revenue loss. But, the power department has put forward a cabinet note urging the CM to keep the concession,” said an official. As many as 150 comments were received for the policy and several suggestions of which were incorporated after mutual discussions.Another hurdle in the policy is that of an electricity tax which the municipal corporations have sought to charge. “The MCD have proposed to charge electricity tax as per the Electricity Act on every household that generates solar power. The government is of the view that implementation of this is almost impossible as solar power generation is not going to happen uniformly across households,” explained an official.The key aspect of the policy is that people who embrace solar power will be entitled to a generation-based incentive of Rs. 2 per solar energy unit for three years. Relaxation in the height of buildings which have rooftop solar panels under building by-laws is another incentive.The policy also mandates all Delhi government buildings to install solar rooftop systems within three years of the policy’s notification. Besides, all new commercial buildings with plot size greater than 500 sq m and 50 per cent shadow-free rooftop area and all new residential buildings with plot size greater than 300 sq m and 50 per cent shadow-free area can install solar rooftop systems.

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