NEW DELHI: The GST rate reduction on renewable energy devices and parts will ease cost pressures across the power value chain enhancing viability, and enabling faster adoption of clean power, industry players said on Thursday. At its 56th meeting on Wednesday, the GST Council approved slashing GST rate on renewable energy devices and parts from 12 per cent to 5 per cent.

The council also decided to reduce the levy from 12 per cent to 5 per cent on fuel cell motor vehicles including hydrogen vehicles based on fuel cell technology, besides solar cookers and solar water heater and systems.

The new Goods and Services Tax (GST) rate will be effective from September 22. Sharad Mahendra, Joint MD & CEO of JSW Energy, said: “The GST reduction provides meaningful benefits across JSW Energy’s portfolio. In the thermal business, particularly where plants utilise domestic coal, the rationalised GST (removal of compensation cess of Rs 400/tonne) will help lower fuel costs, thereby reducing the cost of thermal power. This will help reduce the cost of base load for the country and would also help improve financial health of distribution companies.” Sumant Sinha, Founder, Chairman and CEO, ReNew, said the reduction of tax on solar equipment and batteries will lower electricity costs, enhance industrial competitiveness, and accelerate India’s clean energy transition.

Removal of the compensation cess on coal and merging it into a higher GST rate of 18 per cent will also effectively bring down costs of thermal power. Broader rationalisation will further stimulate domestic consumption and encourage export sectors. Vineet Mittal, Chairman, Avaada Group, said, the decision to slash GST on green hydrogen and electrolysers would lower the production cost and help promote sustainable energy solutions.