The Government of India has confirmed that renewable energy devices like solar panels, biogas plants, and windmill parts are taxed at 12% under the Goods and Services Tax (GST) system. This clarification was made in the Rajya Sabha by Minister of State for Finance, Shri Pankaj Chaudhary.

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The statement was in response to a question from Member of Parliament Shri Yerram Venkata Subba Reddy, who asked whether such devices attract only 5% GST. In reply, the Minister explained that the GST rate is 12%, not 5%, for these renewable energy items.

Shri Chaudhary also explained that GST rates are not decided by one person or office alone. They are set based on the recommendations of the GST Council, which includes representatives from both the central and state governments. This council decides which items are taxed and at what rate.

The Minister also spoke about electric vehicles (EVs). He confirmed that EVs are still taxed at a lower 5% GST rate, which is part of the government’s plan to promote clean transportation in India.

The government has made insurance cheaper for electric vehicles. As per a notification from the Ministry of Road Transport and Highways in 2022, the cost of third-party insurance for electric vehicles is 15% less compared to regular fuel-based vehicles. This rule helps make EVs more affordable for the public.

The clarification about GST on renewable energy devices is important because many people and businesses thought the rate was only 5%.

The lower tax on EVs is seen as a boost for clean transport but some experts say that a 12% GST on renewable devices could increase project costs and may slow down the shift to clean energy.

Still, the government says it is committed to supporting both clean energy and electric vehicles in the long run.